Billionaires Black Book by Robert Bailey

The Billionaires Little Black Book

The Ultimate Secret Behind Sustainable Wealth

By Robert M. Bailey


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THE BILLIONAIRES LITTLE BLACK BOOK Copyright 2010 All rights reserved Robert Bailey


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The Billionaire’s Little Black Book Table of Contents – BOOK 1

Preface 5 Forward 6 Introduction 10 Chapter One 20 Chapter Two 24 Chapter Three 32 Chapter Four 35 Chapter Five 40 Chapter Six 47 Chapter Seven 59 Chapter Eight 62 Chapter Nine 65 Chapter Ten 67 Chapter Eleven 77 Chapter Twelve 79 Chapter Thirteen 80 Chapter Fourteen 89 Chapter Fifteen 101 Chapter Sixteen 103 Chapter Seventeen 110 81 Chapter Eighteen 117 Chapter Nineteen 118 84 Postscript 122 87

BOOK 2 The Billionaire’s Little Black Book 133 Part I: Core Objectives 134 Part II: The 7 Methods for Hiring 139 Successful Professionals

How to Create A Billionaire Team 148


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The Mighty Twelve 155 The Secret of FOCUS 166 Part III: Billionaire Teams 179 High Achievement Six-Pack 180 Tailored-To-Professionals Questions Financial Advisors 181

Lawyers 187 Psychologists 191 Physicians 194 Accountants 198 Physical Therapists 202 Realtors, Developers and Mortgage Brokers 206 Specialized Professional Help 210 Illustrations and Support 214

#1 Scary Story #2 The Color of Money #3 Medical Missteps #4 Tax Planning #5 Too Many Lawyers? Appendix 242 Economics or not Economics: Discover and Leverage Hidden Value

Why People Don’t Ask Good Questions 185


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Preface

Which is more important… Knowing the right people? Or, getting consistent and reliable results? It has been one of my favorite experiences to work with great individuals who do both. These are intelligent and hard working people, who also tend to be fun to work with. The research behind this book suggests that these successful people share an unusual characteristic, too. They are both street smart and intellectually curious. These last two characteristics can be difficult to locate because they involve our own ability to “read” individuals. Like any other skill, we get better at reading people the more we do it. While there are strategies, some might say “tricks,” to reading people most of us are just interested in getting results. Such results might include greater safety, more return on our investments, better health… anything. Getting results reliably and sustainably is what this book is all about. Why the “billionaires” little black book? The billionaires of our time are generally recognized to have figured out the rules of the game sufficiently to write their own. Knowing several of the Billionaires’ trusted advisors, that is precisely what I want to share with you now. I hope you enjoy the ride as much as I am. Robert Bailey


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Forward It is ironic that many investors are intimidated by finance. Whether we like it or not, “finance” influences our lives and our investments every day. This influence cuts across the most common professional disciplines. It includes law, accounting, investment, real estate purchase and sales, medicine or personal therapy, essentially, any professional service where clients offer their trust for intelligent solutions. Such trust is laden with legal and process conflicts. Where the issues are complex, it is likely that there may be occasional unwanted and unintended consequences. Still, I contend, the “new” complexities of regulation, taxation and a global economy present extraordinary (and mutually-beneficial) opportunities for the professional advisor and client relationship. Many times the professional’s first job is to build a bridge for their clients to their discipline. Once that is achieved, the professional can address ways to reach the client’s objectives. It would be logical to think that because individual professionals are also someone else’s client, they would be sensitive to the discomfort around new jargon, new concepts, and new ideas about money and investments. Some professionals, regrettably the exception to the rule, become experts at communicating and engaging, maybe even infecting, their clients with their fascination in the complexities of affluence and wealth. I am happy to say I


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am one of these clients. Our key advisor is extraordinary. The client/advisor relationship would seem to be a fine place to apply the Golden rule. Some professionals do exactly that. There is more to being in the other person’s shoes than might meet the eye, however. Every profession has its own standards and customs. Each firm has its processes. Each professional has his or her style of doing business, and often a specific discipline.

There are frailties in being a professional. Training, testing, and coaching concentrate on being “professional.” By itself this encourages a gap between professionals and anyone ignorant of or lacking in this information. Our interest is how to weigh the human and financial aspects and our professional advice. Information and the opinions of our trusted advisors deserve fair consideration, but perhaps not equal weight in our final decisions. The use of the team of advisors eliminates several negative forces. Professionals may unwittingly use unfamiliar terms with clients. They may identify “strategies” which are merely the current promotion of their firm’s products. There are additional pressures on the client. Distracted by the demands of their own lives, clients have a tendency to depend to their advisor to the point of absolute trust. After all, isn’t our financial class of citizens well trained? Don’t they know more than the typical client? By being open to collecting information through teamwork and “enforcing” a collaborative process, the client and the advisor relationship becomes a powerful tool for mutual success.


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For the advisor, working closely with each client increases the possibility that each client’s networks will open up to share leads, as we will see. The Billionaire’s Little Black Book goes far beyond how to improve the client/advisor relationship. It shows advisors how to work with strong characters, with talent, with big egos to create win-win-win scenarios where the advisor, the client, and firm all benefit by doing right by the client. There are three touchstones, then, in this work.

• The first touchstone is the examination of the

client’s beliefs about acquiring and keeping money. Unfortunately, many people are convinced that they are incapable of making money. Some of these are also fearful that if they do make money, they may lose it all and end up with nothing. These fears only create more doubt and resistance. Most people, to all parties benefit, can overcome it. This book discusses how well balanced management helps overcome money doubts and turns it into actionable plans.

• The second touchtone is how to “reverse engineer” long-term success. The first objective--to get and keep money--is easy to construct when the client and advisory teamwork backward together from a focused and specific goal beyond numbers. The results are often stunning.

• The third touchtone is the pursuit of relationships based on mutual respect. This begins with a character assessment—we might call this the “gut”


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test for feelings of trust. There are several strategies for building good relationships that support investment ideas and earning capabilities. There is an interesting side effect when professionals work as a team. The individual self-reliance of each member of the team increases by doing what is best for the team.

A trusted advisor will demonstrate unusually high levels of self-reliance as decisions get made and corrected to results. The advisory team provides the input and balance, working toward a common objective and contributing as if they are an Olympic coaching staff. The team can leverage confusion and confidence equally and resolve complex business affairs in short terms. The advisor’s self-reliance comes from working skillfully a team of complementary advisors. Being part of professional teams is sound practice and it makes good business. Moreover, it provides a high financial and psychic return thorough the win-win-win solutions that all parties desire and need to grow.

I think you will become very excited about what you are about to learn. Equally important, I believe this process will serve your income and feelings of security. So, let’s get going.


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INTRODUCTION

We have all witnessed the vast and sudden shifting of global capital. This extraordinarily large and fast financial environment is fuelled by many factors: internet technology, the opening of national borders, and by changes in political structure and physical security. India, China, Russia, Turkey, Vietnam and numerous other countries have implemented educational and trade policies that allow them to both participate in and finance global economic growth. Even with populations unschooled in capitalism, they quickly assimilated themselves into global economics and key strategic business and social issues. The global economy changes the American investment landscape, as well. Discussions about what makes a global investment versus an international one persist. What makes a domestic investment depends on where you live. We might logically believe that every American would be curious about whether our national systems for managing financial and personal affairs are keeping up—much less competitive within the new rules of global exchange. Sadly, some people spend more time thinking about this than about their own financial affairs. Or, maybe they feel they mirror each other. I cannot say with any certainty.


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Common sense and common wisdom tells us that our personal investments need to be correlated to what is happening in the world, so we have investment stability and growth. But, common sense also suggests that these investments ought to, in some way, reflect our values and objectives, too. There are two immediate challenges to a common sense investing approach. These challenges emanate from the parties typically involved—from the advisor and from the client. Let’s consider the environment of a few professional advisor specialties. In the United States the professional class of advisors has exploded. Harvard Law school alone has 1500 students and 14 law reviews. In 1995, the American Bar Foundation counted 896,000 lawyers in the United States. The ABA number had risen to 1,128,729 by the end of 2006, and grew to 1,143,358 by the end of 2007. About 2% growth each year, and competitive. Let’s try another field. The 2006 Bureau of Labor Statistics report shows the following employment figures in financial advisory. Financial analysts and personal financial advisors - 397,000 (Projections for 2016 are 544,000) Financial analysts - 221,000 (Projections for 2016 are 295,000) Personal financial advisors - 176,000 (Projections for 2016 are 248,000). This is an average growth of 4% each year, equal to the projected growth in the healthcare professions.


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Here is an outline of the relevant changes: -Demographic shifts:

• More women in leadership roles. • Retirees are back in the workforce. • Kids returning home • Whole industries in flux

-Global economy

• Eurodollar is basis for more transactions • London growing as a financial capital • Asia booming as it embraces capitalism • Low performing countries drawn to

"alternative" strategies (terror, drugs, violence)

-Corporate entrepreneurs (United States)

• Sales of financial service companies are increasing

• Divisions of financial services and banks being closed or spun off

• Turnover of financial professionals is high All of these areas are fluid. And yet, advisors are expected to be responsive in each area, in addition to the core demands of their profession governing laws and regulations, the culture and expectations to the firm, and their own professional objectives. Now overlay the clients’ needs and desires. Over half the population is looking for investment talent with “lifetime planning” skills. By our research, corporate agents are less likely to have broad based knowledge and skills, partly because of the structure of larger corporate


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firms. More entrepreneurial-minded firms and individual practitioners often have broader personal range. Some larger companies are claiming that they have the team inside the firm. Usually they include the attorney, the accountant and the investment advisor. I have yet to see any firm that can demonstrate better results. This is not to say corporate advisors can never provide good advice; we just need to be careful. Ask questions (like those provided in this book) and test all advisors for their biases. Professions segment into specialties like biological species. With that, American society continues its increasingly litigious course. Add to that the political tendency to alter or modify the rules that govern the professions (to protect the public, it is said) and you have an unpredictable business environment. Keeping up on information is a challenge made easier with a team. Some reporters keep pace, are trained in business, and are interested in solid business reporting. And increasingly business media is being made available to the public. Want a really sharp edge? Hire a professional who is a reliable contributor to business media for your team. Add to this to the difficulty in locating credible and reliable advisers, the rapidity of change in tax laws, and changes in regulations surrounding legal structures and business management issues, and you have a complex series of decisions to be tracked and managed. This potential for chaos helps us understand WHY so many clients permit a lack of control over their financial


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future. It opens to door for the Billionaire’s Little Black Book to help. This is one of the best times to engage global challenges and profit from them. But, this will only be achieved by assisting those who have capital, will earn or inherit it, or who are habitual amassers of entrepreneurial capital globally in new ways and with new processes. The Billionaires Little Black Book highlights three inclusive paths of action, which I call the 3 Core Tasks of wealth advisory. The Three Core Tasks are service, fiduciary and

scenario planning. Each adds value to client and advisor information and competence, and so, to profitability. My objective in this program is to help craft the best of all worlds for you, the reader. Financial advisors and planners have wonderful tools at their fingertips. They receive countless hours of training in products and services for the institution. So much so, in some cases, that it can feel overwhelming to everyone involved. The great mass of financial advisors and planners, however, ignore or deemphasize, the needs and desires of the customers. The idea that “one size fits all” leverages hierarchy and command and control systems. It will not work in the era of social media. Just think about this. How can one advisor adequately, much less expertly, manage each customer’s needs and desires? With all the complexity, it is unrealistic to expect a single advisor to understand and manage all of any client’s problems independently. Isn’t it? The trusted advisory team system blends information and points of view from various disciplines and applies it to individual problems and challenges. The benefits of this


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broader base of knowledge help the client and her advisors manage decisions—in a systemic fashion that takes little more time than how decisions are made now. Some of the ideas in the trusted advisory system require being better informed and more conscious and open to new views and solutions. As example, I will occasionally have fun in conversation, referring to prospects as customers, rather than clients. Some people (advisors and clients) noticeably fidget and become visibly upset by my reference. It usually becomes an instructive discussion. Maybe the idea of having a “customer” if you are a professional challenges a professional self-image. More important than this social exercise, however, is being aware of how a blind-side bias can impact the ability to produce. I can back up the notion that people aren’t thinking thoroughly when it comes to money. Our research shows numerous gaps between advisors and clients. Each conceptualizes and values investments very differently. If this gap is not addressed, is the investment advice “good?” Any linguist, or psychologist, or sales manager will tell you: Our words shape and demonstrate our critical and our creative thinking, or lack of it. Let’s not play word and concept games. Some large advisory firms are bundling services. They provide an accountant, a planner, and a broker—some provide a lawyer. It is a way to sell the firm. But, why not call it what it is? It’s a sales tool. Truly matching a client’s need to a solution, is an evolutionary process, not an opportunity to recycle old skills. Financial advisors, attorneys, accountants, doctors, and


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therapists often advertise and promote their services. They should have that right. Regulations and governing bodies separate the professional disciplines, ostensibly to protect the public. But do regulations, created by politicians (many with sharply limited life experience in business or experience in coping with regulations) truly protect the client or do they merely remove opportunities and alter the nature of the risk? After all, moral hazard and unintended consequences are common. As we have said about the global economy, the speed of change has quickened. No one said it was all necessarily better. The Billionaires Little Black Book illustrates a functional, personalized, interdisciplinary system for managing one’s important decisions. It invites various non-financial expertise to the table for the creation and management of a genuinely comprehensive long-term (or lifetime) plan. For the advisor, the trusted advisory approach is an open learning system and an income generator. For clients, running the trusted advisory team opens a new level of financial education, stability, and, managed well, vastly increased income and asset protection. The Billionaires Little Black Book was born deep inside particular situations I witnessed in institutional investment, where I saw reliability and information clash and individual professionals obscure key details. There is no place for ego in professionally managed long term planning. Originally "The Billionaires Little Black Book" was intended for wealth advisors. I wanted to offer them ways to work more cohesively with a large range of professionals to build


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strong networks for their clients. We all realized that this would also extend their referral networks, instantly. Our research showed that this market was only 1 to 2% of the financial advisors. This roughly represents advisors who work for their clients, first and foremost. This was a distressingly small number. A few years ago I was at a cocktail party in Palm Beach and I mentioned some of the “Billionaire Little Black Book” elements to a very engaging woman, possibly in her early 70s. She liked my ideas. In fact she noted a possibility I hadn’t considered. With two fingers resting gently on her chin she told me, “If I did that, oh my, my adviser couldn’t steal from me.” Thanks in part to the Palm Beach lady and her curiosity, I realized that my message was welcome in a much larger market, the clients. Any affluent client is seeking results and control. When I expanded the advisor premise, it was quickly evident that the trusted advisory team strategies work even better when they are client driven. In addition to the three tasks mentioned earlier (service, fiduciary, and scenario planning) there are four plans that put the tasks to work. These are: the business plan, the succession plan, the estate plan and the wealth plan. It is the wealth plan that attracts most peoples’ interest. It’s not only a method of generating true wealth, a wealth plan also bridges multiple generations. It addresses the origins, the history, the operations and philosophy of the assets. The wealth plan goes beyond the discussion of value, though, to address the family’s values, what is important to them as a family. And this is more important than many believe. Values are the non-financial aspect of the assets


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that make the difference between sustainable success and family failure. The trusted advisory team strategies favor advisors as well. Most qualified new advisory business comes from referrals. Imagine how efficient it is working together with other advisers who are acting as a self-monitoring referral system for each other. It is a sort of professional honor system that favors client security and productive management of business affairs equally. At its core The Billionaires Little Black Book raises questions. Productive and sensible choices must be and can be made for you and by you. And it can be done very thoughtfully in ways that you control, enjoy and fully understand. Let’s consider each of the steps now.


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You are about the learn the

Secrets of True-Team Strategy TM Which Explains…..

WHY YOU WANT SUCCESSFUL,

ROUNDED, Collaborative PROFESSIONALS ON YOUR

TEAM. Think of this as--

The right people,

doing the right

thing, in the

right way, at the

right time, for

the right reason.

This True-Team Strategy is the Mother of All Management Skills;

it supports and establishes your purpose.


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____

CHAPTER 1

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How The 7 Strategy System Preserves Your Capital and Capitalizes on Future Opportunities for Wealth

ho do you trust?

In business there are many people and institutions we expect to perform on our behalf and in our best interest. The more we achieve, the more important and relevant the axiom “inspect what you expect” becomes. Without regular contact with our trusted advisors, we rely upon our own decisions, which may or may not necessarily lead to the most beneficial outcome for ourselves. What I hope you will learn here is how to better create value from your money and your time. (By the way, this is the first secret—so write it down. Ask yourself how you can create value from your money and your time? Write down what you believe is the answer; it will be interesting for you to return to this once you have finished this book.) As we grow financially, we must diligently watch over our

W


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growing assets; almost invariably these become more complex and can be overwhelming without well-considered advice and a comprehensive business, investment and life planning (BIF). Wealthy people use advisory teams to manage their substantial portfolios and other investments. This team may include bankers, private money managers, professionals in groups that offer combined services such as investment, legal, finance, accounting, travel, security, and even shopping assistance. The very wealthy tend to use one team for their financial needs and, in turn, these advisory teams tend to do well themselves. These clients tend to be very attentive and know whether or not their managers are performing. Not long ago I consulted a family with a large residential real estate transaction. The subject property had been neglected for nearly 50 years. It wasn’t that the house looked old. It looked very nice, if dated. But the structure--the systems, the roof, the foundation the electric, water and heating services—were below code and, it turned out, oil fired heating system had become dangerous. It is not unusual for city-dwelling second homeowners to have little interest or ability in maintaining them.

In this case, however, this property was potentially the worst house on the best block. One sibling wanted to sell the property and move on. He was not interested in renovating the old family home. The other sibling wanted to keep the house, but soon discovered a rat’s nest of legal, architectural and municipal hurdles completely foreign to her.


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The first step was to clarify the ownership and future rights to the title. The parties met at an upscale New York City law firm. At that first meeting I did one thing. I listened. What emerged was a picture of abysmal management, accurate but stifling legal advice, and an accounting history that had missed opportunities to reduce taxes and benefit from investments for over fifty years. The original investments were permitted to sit primarily in one or two industries throwing off a 2% dividend on which the family lived. Over that time, the stock increased in value, but never (until near the very end of the matriarch’s life) was anything done to address the tax consequences of the 35-cent basis value of the original shares. The attorney presented his reasons for why the house should be sold. The gap between the advisory team and the clients became obvious during the first meeting. The “lawyer’s side” was unyielding and stuck to the so-called facts, mostly the threats ahead. “Our side” consisted of the professionals acting as collaborators, who were beginning to understand my arguments for using the “team” approach to reposition the property and some other assets, profitably. While the attorney debated the effects of the situation, we went to work. The sinecure grounds manager who had let the property fall into disrepair was the first to be let go. Next came anyone involved in the property’s downward spiral--the plumber, electrician, the oil company, the accountant, and financial advisor were dismissed. The attorney stayed on (one of the siblings was dedicated to


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him.) Still, over the next three years we were able to rebuild the 1910 home and improve the grounds. The value of the estate at $3.5 million increased to over $10 million in under three years. The investment in property improvements alone beat the market, which was itself enjoying new highs. The equities markets, however, have never offered the tax benefits of well-considered real estate project investment.

The professional fees were all deductible. Needless to say, the family was pleased. You will understand why, better, as you read further.


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____

CHAPTER

2 _____

A “New Day” for How to Think About Your Assets The profession of providing advice has a long history. The European kings had their councils. The crown princes of Europe used the Rothschild family to manage their money, and borrow for expansion, beginning in the late 18th Century. Like their European counterparts, American industrialists of the 19th Century became confidants of bankers to manage their cash requirements and broker even their most aggressive investments and business acquisitions. As personal fortunes grew, private bankers began to offer the “office” that would come to take over the lifetime financial responsibilities of the financial elite, in return for a fee. It is known as the family office, a home for the management of the assets of and services for those with very high net worth. Wealth has become a broader and global experience as lucrative investment opportunities and choices have


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become available to more people. But, these multifaceted and high-speed markets have also changed the calculations and altered the skill sets necessary for success. This fact calls upon our advisors to be better educated in overlapping disciplines as never before. The client-directed team approach is a logical way to address the challenges.

Contrary to the promises of some financial advertising, a financial life plan requires hard work and careful planning. And the nature of that planning has changed. Planning decisions are no longer an event, but an ongoing process. That correctly implies a balance where clients are responsible and team members are accountable for all results.

The complexities of money management and the laws that govern this field simply require thorough and careful study. We can receive proper professional advise on our cash, property, education, health, and other investments


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best when we have experts in each working as a team. Clients work best with professionals when they are clear enough to guide the professional. The best way to guide professionals is not to become an expert, but to demand and expect adherence to three tasks. The three tasks for rounded and thorough business, individual and family economic planning are:

• Service

• Fiduciary duty • Scenario planning

These tasks are easily applied to the four plans for

sustaining growth; the four plans offer a philosophical orientation whose elements are readily integrated and managed throughout one’s lifetime. These include:

• The Business plan • The Succession plan • The Estate plan • The Wealth plan

While these tools are excellent for securing financial objectives, is getting more money and greater wealth the sole objective? Not always.

Many of us want to engage in pursuits that enable us to better the lives of those less fortunate. Richard Branson, U2’s lead singer Bono and the late John Templeton each engaged pursuits well beyond their core businesses. Branson, while at this writing managing an airline, is also committed to travel in outer space and to creating a renewable jet fuel; Bono U2’s lead singer is an agent for world peace; and the late John Templeton who ran an


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investment empire, funded discoveries and new thinking in religion and science.

That is why many come to believe that the most exciting of the four plans is what I call the wealth plan. This plan has the capacity to expand our sense of meaning in our lives. Meaning, however, also emerges from our core business and work. I am not a financial advisor. I consult in real estate finance and marketing. But, my first job after college was as a licensed insurance agent for the Combined Insurance Company. I lived in Virginia, just outside Washington, DC. For me, sales was an eye-opening experience. I met numerous people who excelled at sales of what we called “sickness” policies that our company’s owner, Mr. Stone himself, referred to as “the little giant.” It was so named because it provided solid value to many at low cost. Stone developed a system that attracted driven individuals and then trained them according to his positive thinking beliefs. This included a scripted ten-minute sales presentation. One memorable attention checker in the presentation was this: “We not only pay you if you are sick, Mrs. Jones, we pay you if you are sick and tired—how is that? No we can’t really do that, but…” A bit of humorous relief delivered. Ideally, the serious sales presentation continued through to the signing. Slick and scientific. These low-cost “little giant” policies sold well and did provide value to the customer. In 1979, it was rumored that Clement Stone had a net worth of around $500 million dollars. For my part, I struggled with whether this was the best product I could be delivering these people. Perhaps I


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was too soft for this type of selling. I felt I could be successful at it, after all it provided me with a remarkable insight into people and the compensation seemed good. But, it felt awkward to be so impersonal, on what I felt was a very personal decision. So we parted ways. Over the last few years I have spoken with professional advisers interested in real estate. They all like the potential profit margin, the income and the tax benefits, working together. In New York, where I maintain my real estate broker’s license, I am not permitted to advise on legal matters pertaining to real estate contracts. And that is a wise law. Overall, I feel New York State’s real estate laws are well written and well intentioned. They are balanced to serve both the agent/brokers and the investors/buyers. I believe they might be used as a model for good client advisory, as you will see. Real estate has provided me the opportunity to experience financial opportunities that occur faster than most professionals can even dream.

In the example of the house in Long Island from the previous chapter, I recognized a negative scenario that could have cost the family several million dollars in estate taxes. Instead, with a trusted advisory team over a period of three years, building the right team, and staying on track with the client’s objectives, we restructured the estate, and made investment changes that produced a 150% increase in cash value invested. This exceeded even the bull market of the period 2002 to 2005. Here is the rest of the story. Picture a large summer “cottage” in the estate section of an


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old Long Island summer community. The house is in disrepair, not noticeably to most people, except for some of the obvious wear on carpeting, floors and doors. However, it was not the desire for cosmetic changes that hastened the decision to renovate, what led to the decision to renovate was a structural hazard. The caretaker of the property, using a clever but potentially dangerous short-cut, had extended a 30 foot horizontal chase from the oil burning furnace to the chimney. Over a 20-year period fumes had begun to escape this unusually long chase to leak into the house. You can guess what happened next. The estimate to replace the furnace turned into a rolling estimate as other problems began to appear. It wasn't just the furnace that had been jerry-rigged, but various parts of the entire house! As a structural support, the same caretaker had placed three concrete blocks on a piece of plywood. One of our new team members brought to our attention that these three concrete blocks were holding up the entire back section of a three-story house. What happened next was a series of drastic changes that I described earlier. All the advisors were fired, with the exception of the old entitled family attorney. A cohesive partnership was created; a team consisting of a builder, subcontractors, engineer, and other craftspeople required to rebuild the house in its entirety worked together to create a finely orchestrated process. Moreover, the house was located in an historic district. It not only couldn't be destroyed and rebuilt; the house had to be “replaced in kind.” If you have ever worked on a historic home you know the level of engineering and architectural skills needed. Such skills exist, but it takes a team to make them


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work. Seeing is believing.

The orchestration of the legal and financial structure was quite different from what had been. In a sense, the creativity required to achieve the historic renovation, sparked the creativity necessary to build the asset- management and investment team.

In short, we devised a holistic plan that changed the ownership; reinvested funds with taxable advantages and addressed, as best we could, the concerns of the heirs.

This is the process we’ll investigate right now. Several years ago, I was invited to teach institutional investment advisors and institutional consultants, how to market to their clients. Their clients are the endowments, foundations, municipalities, pension funds as well as high net worth families. They include organizations like Calpers and The Bill and Melinda Gates Foundation. During that period, I talked to hundreds of money managers and institutional consultants, as well as top executives of endowments, foundations, and managers of corporate, organizational and high net or family offices. It had become apparent at that time that few advisors were listening carefully and providing what their clients wanted and needed. I've tested and adapted the lessons and approaches I learned from that research and work to help others serve and expand the lessons on the wealth management industry. I generally have financial advisors in mind, however please note that these lessons -- and I argue the accountability for


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results -- apply equally to lawyers, accountants, structure experts, business managers, in short, anyone with a fiduciary responsibility to the client. More on this later. Signing with an advisor is an important step toward one’s financial future. Clients anticipate leadership from their advisers. Clients also expect results. Clients also like to be informed—some even like to learn. The advisor’s job is all about response.

The corporate financial behemoths have been slow to notice the renegade actions of rogue traders—Joe Jet and Nick Leeson. The complexities of a corporate mentality that permits delayed recognition of problems might well be seen as evidence of a systemic problem. By contrast, individuals can move more quickly to remedy a problem. It's easy to see why. There are more choices than ever before to be found on the Internet, better marketing, and a greater ability for customers and clients to know what they want. Let’s start with an example of learning about how money works.


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_

CHAPTER 3

_____

How to Make Money

Warren Buffett is known for not sharing his specific strategies; and yet his knowledge is so desirable that a dozen or more authors have written about what they think he does. By Buffett's own admission, the best book about him is called The Essays of Warren Buffett, by Professor Lawrence Cunningham. The book carries a series of articles explaining why Mr. Buffet invests as he does, and how he manages risk and opportunity. People want to know what works. Several wealthy people openly share their observations about investment. Donald Trump and Robert Kiyosaki cared enough to write a book about the importance of investing as a wealthy person, called “Why We Want You to Be Rich”; perhaps not the classiest title, but their direct approach is refreshing, and their advice extremely useful. The saying "the rich get richer" negates the opportunities available and the type of work that makes one wealthy. Kiyosaki and Trump have evolved themselves into teachers. And they begin by encouraging a different approach to money—that is their job #1. That is their key advice. It is difficult to overlook Donald Trump's role as an


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educator. After all, Trump’s television program, "The Apprentice," provided MBA-level lessons on business decision-making. Another book on the subject of becoming rich is, “How to Get Rich”, by Felix Dennis. Dennis is a publisher behind such diverse publications as Maxim and The Week. He is also a very talented poet. Dennis’ stories are both pointed and funny, and they have much in common with Kiyosaki and Trump. For one, he's really made a lot of money. What's more important, though, is a sense of the humility necessary to really "make it." Get rich quick? If you are very, very lucky, yes, you can. You can also lose it pretty darn quick, something I regret being experienced in. Let’s dissect how to get and keep what you want. The lessons of the real rich are about sales, persistence, teamwork, collaboration, networking and finance; and using one’s intellect. It should not surprise anyone that a very successful person's high standards are carefully crafted, not manufactured. Significant thought goes into their creation and execution. Such is the case with one story Trump tells of finding a wet, men’s room floor. He prompted a staff member to remedy the situation. When he went back to the men’s room the floor was still wet. He fired the staff member. Was it a question of responsibility, promptness, loyalty? No. It was a question of making sure there was no threat of a lawsuit should someone fall because of the wet floor. But, even before he was an hotelier and entertainment executive, thoroughness was at the core of Trump's thinking.


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In “The Art of the Deal” Trump speaks of a disagreement with his father about the expense of marble walls at Trump Tower. His father, Fred, argued that the expense was excessive. Donald prevailed and the reputation for elegance coupled with service continues today. Their views differed, but their mutual respect was always intact. Knowing whom to work with, and how, is a science; the art is in recognizing the opportunities. Our discussion of the “7 Strategy System” begins with a tale about a family facing many unknown elements in situations where it might be too late to activate the benefits of professional advice. I believe you will find the following short story instructive. Possibly even fun.


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_

CHAPTER 4

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Sunset: Day 1

Arthur Magnus cast a glance across the room. It was a brilliant sunny day. Cool, but not cold. The hawks flew in their wide circles high over the main field of Barcross House when there was a knock at the door. “Come in,” said Arthur evenly. “Hello Dad,” said Michael, Arthur’s eldest son. He entered the room with his sister, Mary. “Hi Daddy, are you feeling better?” “Sit down you two,” Arthur said. He smiled warmly as he motioned with his hand. “We need to have a little talk.” Michael sat on the Windsor chair near his father and Mary


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eased herself onto the chaise closer to her Dad. “What is it Daddy?” Mary asked. Her voice was small and concerned. “Yes Dad,” said Michael, “what is it?” “Doctor Fulani just called,” Arthur began, “and while he has inconclusive results, something inside me looks a little, well, off.” Avoiding their glances, he continued. “I don’t want you two to worry about me—or anything. We have always planned well and been careful with our businesses and investments. It’s just that now, business is increasingly influenced by changes that seem to occur much more frequently. Unpredictably. I cannot help but think we need to review matters more closely. Differently.” Mary leaned toward her father. “But Daddy, what are you saying, surely Doctor Fulani will—“ “Not now honey, don’t be upset. Dr. Fulani will let me know what the outcome of the results are as soon as he has studied them.” Arthur said. “I want us to be as confident as we can about our financial and living structures and protect them to the highest possible extent.”

Michael leaned forward. “Dad, it sounds like you have some concerns about the new joint ventures,” he said. “We have been monitoring them for the last 18 months. The Ingliss ventures are doing quite well. In fact, this year they should return about 28% and--” “Michael, that’s wonderful. And I read your report—excellent work, by the way son. But that isn’t what I have in mind. When I first started in the scrap business, matters were simpler in general. Your mother and I worked very hard. She was my bookkeeper and my second in charge.


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And we built that business together. We were successful enough that we were able to buy Megan’s Bay Farm—our first--before you were even born, Mikey. Then when Mimi came along, we decided to move out and live here year-round. More space, you know. Today the global economy has the potential to provide us previously unimaginable opportunity. At the same time the workings of the world has changed as well. I don't need to tell you about terrorism and global poverty. You are both great students and you know these things. You've done a wonderful job in learning about the businesses and helped build them. But, it seems to me that the only way to address the heady complexity of the fast moving world today is to act like King Arthur with his wise roundtable of good men — and now,

A Brief History of Financial Service

In the early days of the American colonies, Philadelphia was the financial capital. Trading of "stock" took place under a tree, so the story goes. The original terms "board" and "chairman" derive from this period; a board was the table on which traders operated and the chairman was the lucky person who provided the chairs for the meeting. The “market” was anyone who could participate in a trade. There were very few people at first and the value of the shares was often in question—sometimes hotly disputed—as there was no formal market. With time and sophistication Philadelphia’s Chestnut Street became home to the nation's most powerful financial institutions. Philadelphia remained the American financial capital for almost 40 years, when in 1820 the fast-growing New York City economy through the exchange there. Since then, Wall Street has become synonymous with wealth derived from stock exchange.


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women. We need to get a bunch of trusted people, loyal to us, who will watch out for our mighty kingdom, so to speak,” said Arthur, smiling. "It didn't turn out so well for King Arthur. He lost his queen and the empire suffered, too" said Michael. Michael and Arthur laughed. As Arthur nodded, Mary could only frown. "Dad, you have always had the knack for sniffing out solutions before they're needed," said Michael. "And increasingly, the financial journals and others talk about having the CPA and insurance guys work with the broker and the attorney," he added. "Is that what you have in mind?" "I don't think that's enough, Mikey," said Arthur. "I think we need to be more -- what's the word -- holistic. There is more detail in contracts, like the new stipulations and limitations in insurance policies, for example. It's my impression that expertise has a greater value working simultaneously than ever before," Arthur added. "At the same time most people concentrate and depend on a single expert. And that's not very effective, or smart, because it's so isolating. No. I'm thinking of something more like the roundtable.” He winked at his son and gently patted the young man’s shoulder in silent appreciation of the idea.

What I have in mind is a team of different experts around a single table,” said Arthur, “refining our overall strategy from different points of view?" Mary leaned toward her father. “Daddy, you’ve always said that we should find someone who can help us think it through -- do you have someone in mind?"


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"I certainly do," said Arthur. "I've set a meeting for the three of us first thing tomorrow morning with John Dockerty. You two have known John for a long time and he’s an old hand at investments. What you may not know is that John is a partner with us on a number of our ventures. He's an unusual man who often questions authority, even in his own firm. I think John's input on my roundtable concept will be extremely helpful here," Arthur said. There was another knock at the door. "Mr. Arthur,” said the housekeeper, “Dinner is ready.” "Thank you Cynthia,” said Arthur. Arthur paused again to look out the library’s main window. The sun was cresting over the hills behind the field, bright golden rays filled the room. "What do you say we three have a quick cocktail in the living room before Cynthia has a conniption about us getting to the dining room for a cold meal?" Arthur smiled and gently touched each of his children on the shoulder. "Sounds like a good plan Daddy," said Mary as she hugged her father. Across the field in the setting sun beside a giant willow a relaxed red fox and her frisky cub absorbed the warmth of sun’s narrowing rays.


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_

CHAPTER 5

_____

Breakfast: Day Two

Arthur spoke first.

"John. I want to share some inside information with you.” Arthur smiled to reassure his friend. “The three of us had a little chat last night. It was the same discussion you and I have had numerous times before. I think we need to look at our financial house, but in a different way. Oh, it's not that you've done such a bad job," Arthur mused and smiled again at his old friend. Over the past 34 years, John X. Dockerty had become financially independent, that is, working side by side with Arthur Magnus.

He and his wife, Rebecca, had met when Arthur and Ellie had been running the scrap business for just a few years. Then, Dockerty was a young lawyer and CPA who dabbled in investments. Their mutual interest in business and their passion for the fruits of hard work had united them, instantly. The couples enjoyed traveling together, and they all became close friends.

“One does not have to be an angel in order to be a saint.” Albert Schweitzer


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Unfortunately, John’s wife was killed in a tragic riding accident. Devastated and alone, John threw himself into his work. After nearly a year of this nonstop pace, Arthur felt that John needed some time away and told him point blank, "You have to pace yourself, John or it might kill you. I want you to drop everything and fly down to our place on St. Barths. Take all the time you need, we'll all still be here when you get back." When John returned he was rested and reinvigorated. There he'd met a lovely woman and they had fallen in love. John remarried three months later. And Ellie embraced Carol as a wonderful new friend. The group settled into the supple dark brown leather chairs in John Dockerty’s office. "John, let's start at the beginning," said Arthur. "Let's talk about what's changed. You are a CPA and you've been an attentive and genuine investment counselor, as well as a very insightful attorney, a businessman, really, who knows the law. Actually, we will be needing your ideas and combination of skills and business savvy more today than ever before.” John nodded in earnest and began speaking. “Off the shelf financial advisory is the phenomenon of a wealthy society,” he began. Throughout history, business people made their investments pretty much on their own.

Team member job #1 SERVICE

Locate Talent. Test it. Take action.


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They may or may not have used a lender. “After having graduated from business school, you two probably know more than I do about these historical details,” he said, looking at Michael and Mary. “Needless to say, our society has become more financially complex. I sometimes wonder if we professionals are responding to the demand, creating it, or a victim of our own successes and innovation.” Smiling he added, “Maybe the reality is a combination of those.” “Investments are now very large and the market swings are more volatile. Though successes, such as the ability to finance a popular chain like Starbucks, abound, there are also glaring failures in our institutions, such as the disaster of Enron, etc." said John. “I’ve earned my living as a numbers cruncher" John began. “When your Dad and I started, we were simply watching cash flow, and profit and loss. Today, there are numerous additional government programs like FICA, Social Security and various state and local taxes that demand their due. So investments have to be arranged differently. In business, we must look to control our expenses in order to at least stabilize, and ideally increase profits," John continued. “Let’s think about a healthy, wealthy society," he said, motioning across the horizon with his hand. “In such a society the importance of the true professional is how he or she defines and evolves service standards for each client, particularly as each client’s wealth increases. A service is the non-material equivalent of a good.


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TIP: How to Receive Reliable Professional Service

The bad news for the wealth advisor in the top 2% is the extra homework. The good news is that over time she can systematize or delegate much of that work so that she can focus on providing service. These are the professionals on the rise that we look for.

With all advisors it is a good idea to deconstruct "professionalism." This is a little bit easier now, because professionals can no longer hide behind privilege or information monopoly. Moreover their clients and customers can demystify the professional jargon themselves thanks, in part, to the internet.

The short list below includes the most frequently mentioned praises from the clients and customers of the top 2%. How many of them have you experienced?

! Your advisor contacts you personally at least every 30 days.

! You receive regular life improving, financial-state enhancing, or family asset-building or protecting suggestions.

! You get meaningful reports on achievement of your objectives, or a full explanation of the status with specific costs and results.

! Your advisers report taking the precise actions you discussed and approved.

! The advisor uses language, gestures or processes that put you in a position of engagement, comfort and solidarity.

How did you do? Just as important, how did your advisors do?

This definition implies that the buyer has recourse if he is dissatisfied.” Michael leaned forward. "Isn't that what fiduciary is about, in the case of investing?" he asked. "Fiduciary. That's a very important aspect, Michael," said John. "Fiduciary used to be limited to the vocabulary of savings-and-loan institutions and trust officers. Today, as you probably know, the idea of an advisor being legally


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responsible for their advice and their actions, is gaining momentum," said John. “And it’s about time!” “As I advanced in my career”, he explained, “I chose to keep my practice small in order to be able to focus on the needs of my clients. I learned that a good advisor works closely with his clients and acts in their best interest. Some of my advisory colleagues who chose to work in large institutions do not always feel that is necessary.” John stopped thoughtfully, then continued. “Those who used to be called stockbrokers, overnight became financial advisors. In the fine print, this might actually be a conflict of interest, because many of these financial firms are themselves publicly held companies. However, they easily include their companies among the stocks that they tout. They are subject to the decisions of their firm’s boards and stockholders. They run in a traditional hierarchical fashion. Advisors are generally considered to work for the client. In reality they are agents, often employees, of large corporate concerns. This is partly why these “advisors” are so seldom independent thinking or independent acting,” John’s face appeared to wince ever so slightly. “Career turnover is inevitable. It has become commonplace to read about layoffs. Unless they have separate agreements with the primary broker and executive leadership of the firm, advisors are dependent on a broker-dealer or clearinghouse to execute stock and other investment transactions. What I didn't like about these large firms is that they may appear to guarantee a position. This doesn’t work for two reasons. Number one, I believe this is a disincentive to the individual advisor, the advisor tends to lose competitive


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energy. And number two, the advisor working in a corporate environment cannot be a genuine entrepreneur. I chose to be entrepreneurial. It's more fun, and it's generally more rewarding -- in many ways," said John as his eyes opened and he brightened with a wide smile. Arthur Magnus leaned forward. "John, this hands-on concept sounds like a very important piece of the plan we need to assemble. What do you suggest we do to take this further?" Arthur asked. John sat forward in his chair, his pen in hand. "Arthur, I've always believed it was good business to be honest and responsible. I've always practiced what I understood to be fiduciary," said John turning toward Michael. "It's been part of your code John, as a man and a trusted colleague," said Arthur to John. John continued. "What I think you're asking, though, is about fiduciary practices that will both maintain and build upon the wealth that you presently have. Is that right?" John sat back resting his chin on his intertwined fingers. Michael spoke this time. "It's been interesting sitting here listening to you two. I admire your trust in one another," Michael said glancing first at John Dockerty and then at his father. Arthur was motionless. "Mary and I don't have these relationships, not yet anyway. So my sense is that we need to build fiduciary into our plan in order to acquire this level of trust and respect… over time," Michael said. Intuitively everyone turned to Arthur.


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"I couldn't have said it better myself, Michael," Arthur said. "Business is about collecting good people. The better the people you surround yourself with, the better your business. The better your business, the better your income, and life," Arthur added. He was quiet and his eyes went to his own hands, then to John Dockerty. "So John, what's our next move—in your opinion?" Arthur asked, sitting back again. "With your permission, I'd like to suggest that we visit a writer I know from the Times Union, Rita Sands." said John. "She's been covering the financial markets for a long time and she's very knowledgeable. Furthermore, I think she would be interested in speaking with you about fiduciary," said John. "And so if you’re game…" "I love the idea," said Arthur Magnus. "I've always been treated fairly by the press. Of course, it helped that we’ve never had anything to hide, I suppose," said Arthur thoughtfully. "Can you set that meeting up with Ms. Sands, John?" "Consider it done my friend. I think you'll all enjoy meeting Rita Sands,” said John as his hand grasped the telephone receiver to his left on the desk.


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_

CHAPTER 6

_____

Mid-morning: Day Two

"Investment advisory is challenging and complex—and it can be a lot of fun," Rita Sands began, “if it’s done correctly.” She was attractive, striking, and self-assured; she dressed professionally yet with a stylish flair in a crisp white blouse with an open collar that reveled a simple gold chain, her blond hair pulled back in a tight knot. It was clear from the way she carried herself that she was did not easily suffer fools. Rita Sands was a self-made success story. She had, in fact, earned her stripes in a man’s world by being her own person, independent thinking and confident.

The world in which she worked, reporting on corporate leaders and financial wizards of profits, was also a world where some trespassed into the wrong side of the law. Rita was tough and informed and by day the clock was one of her performance benchmarks. And so, Rita minced few words. "Clients have vastly different knowledge, risk tolerance and personalities. Some people have a desire to be passive investors. They put in their money. They close their eyes and they hope for profits," said Rita. "It's not advisable as a strategy," she continued, “with that said, just as many


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people are active investors." “American liberal education has done a pretty awful job of teaching people how money works," she said. “Robert Kiyosaki has made himself a household name by illustrating this knowledge gap through his “Rich Dad” books and products. “The high school where I attended," she said, "offered a fun program about investing in the stock market. The winner made the most money and usually an “A” in the course. Presumably there was a correlation between financial acumen and one's academic competence," she said as she raised her right hand as if taking an oath. Just then Rita’s telephone rang. "Excuse me," Rita said to the group. She pulled off an earring and raised the telephone receiver. "Hello?" she said. She listened and looked at the group assembled in a room and smiled. "That's terrific, see in a few minutes," said Rita. She looked up smiling. "Boy, talk about fate," said Rita. "That was Steve Jones; he's coming up here right now. You know Steve, don't you John?" "Is he with Griscom-Jones Associates?" asked John. "Yes. Chairman of the board and one smart cookie when it comes to real estate," said Rita. The rest of the group

Team member job #2 FIDUCIARY

Anyone touching your money is responsible and accountable for it.


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looked puzzled. "I'll explain why this is so appropriate that Steve just called," Rita said. "Making money may well be fun, as you, John, and Arthur understand. We also understand something many people don't. The ability to make money is not to be taken lightly. It is a serious discipline," said Rita. Rita sat back in her chair and placed her hands gently on the leather top of her desk. "Permit me to tell you a short story," said Rita. “This story is based upon an old school, stockbroker. One who is incapable of fathoming the possibility that his customer could have a leading edge investment idea. As you might already guess, the advisor provides few investment ideas beyond his firm’s approved list. The stocks on his list typically produce returns in the 8% range. His best fixed yield investments offer a safe but stagnant 2% - 4% gross annual income. In late 2006, I discovered an interesting company that paid a 14% dividend, had strong management, and was positioned for continued growth," said Rita, "I ran a story on it, because I found it interesting. A broker friend called -- not you John, someone else -- and asked me about it. I never give stock recommendations, very dangerous and it's not my job. But this fellow is very persistent. I referred him to an old article that I had written that I felt was appropriate about a value/dividend strategy. The article suggested buying certain stocks on a dip and holding them. Essentially it was about using a value/dividend strategy. The next suggestion was to reinvest the dividend into the same company. For most


50

people, and especially for entrepreneurs, the accrued investment was to be used for a business money management account, so it would typically be subject to corporate income tax. The broker begrudgingly thanked me and hung up the phone. I never thought I'd hear from him again. In an odd turn of events, I met with another friend of mine some weeks later for lunch. She began to describe an investment situation that sounded familiar. Her broker raved about a stock opportunity and suggested that she buy in. But instead of waiting for her to agree to the purchase, her broker bought the stock for my friend’s account. It had not dipped down to the buy price, which was part of the strategy. About a week later the stock dipped. As my friend told me this, she recalled what he'd said in the first conversation, ‘You may as well get it,’ he had said at the time, “you won’t save anything by waiting.’ I sighed, anticipating what was to follow. A few weeks later, my friend told me, her phone rang. It was the broker, excited and happy as a puppy. ‘Incredible,’ he said. ‘That stock took off!’ We had noticed, too, of course. After all it was my idea! It had in fact, increased in value over 20% in a few weeks. ‘I sold it,’ he exclaimed to my friend, overcome with his apparent brilliance in stock picking. My friend told me that her broker had become ‘nervous about losing the profit.’ My friend was frustrated, unsurprisingly. She is a good friend, so I told her it sounded like the broker


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I'd spoken to just a few weeks before. I told her the rest of the story about the suggestion that he read my previous article. ‘I'm glad you told me,’ my friend said. ‘But what can I do now?’ I made two recommendations to my friend. 1. Buy it back. 2. Give no more money to this advisor. I learned that she followed my recommendations. Not only did the shares triple in price over the next seven months; she has a new broker. And…the new advisor has been listening to his new client.” Rita folded her hands on her desk and was quiet. John Dockerty spoke up now. "I've heard the same story hundreds of times," he said. “It was a bit more usual in the old days, but it still happens," he added as he shook his head. "Unfortunately, there's very little the average investor can do about it," he said, "The legal expenses usually exceed the loss." "That's why I'm glad

WATCHING MANIPULATION Registration of investment company advisors was required under Investment Advisers Act of 1940. Advisors managing less than $25 million register with their states. Both registered and unregistered advisors must adhere to state and federal antifraud provisions. Day-to-day legal issues are governed by state law or the United States Securities and Exchange Commission (SEC). Initially brokers sold other companies’ stocks and bonds. In the 1980s stock brokerages were allowed to become market makers, by trading their own shares, oftentimes very large blocks, of company stock. This created an opportunity for the brokerage firms to expand their business.


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that Steve is on his way here," said Rita. There is a knock at the door. "Maybe that's him," Rita said, "Come in, Steve...?” "How did you know?" said the man as he opened the door. He walked across the room toward Rita and clasped her shoulders gently giving her a peck on the cheek. "Steve Jones every-one," said Rita. "Wonderful to see you Rita. Hello everyone," Steve Jones to the group. Rita began again. "As a broker, Steve lives by a different set of rules. I interviewed him recently on a daily radio program about acting as a fiduciary, the topic that we are discussing today," said Rita. "Well, it’s not a topic many people find very enticing!" added Steve. "Not where there's money concerned, not any more," said Rita. Arthur Magnus leaned forward and asked, "Mr. Jones, I'm a bit familiar

WATCHING MANIPULATION, Part II During the “rolling recession” of the 1980s and 1990s, more Americans were investing in the markets and entrepreneurs began to add improvements that serve customers. Banks were permitted by the Federal Reserve to introduce discount brokerage. It was suggested by some that full-service brokerage commissions were excessive; the added "extra services" were rarely used by most investors. Why not simplify and streamline the process and pass the savings afforded by new automation to the customer? Today there are discount brokers like Charles Schwab and T.D. Ameritrade, but deep discount brokers such as E*TRADE and ScottTrade. The service lines between services are even more blurred. Since the late 1990s, even deep discount brokers have begun to provide sophisticated charting and tracking services online.


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with fiduciary because of the number of solid real estate transactions I've been part of, but I'm unclear as to how fiduciary skills apply defacto in other investments." Steve Jones took a chair and smiled at Arthur Magnus. "That's how I got involved in this, Mr. Magnus. Most people don't see the connection. And most investment advisers avoid fiduciary like the plague. But that's changing," Steve said. Steve went on to explain how recently increasingly he was being called on to discuss the estates and estate planning where real estate was a significant part of the assets. "Increasingly, equities are less about creating value than they are about a claim on cash or cash

INSIDE INVESTING KNOWLEDGE, Part III

NASDAQ, the National Association of Securities Dealers Automated Quotations system, was created in 1971 as an electronic bulletin board for new issues. NASDAQ helped lower the difference between the bid price and the ask price of the stock, called the spread. Somewhat paradoxically, it was unpopular among brokerages because they made much of their money on the spread. Discount brokerage and the new exchange further blurred the public's ability to distinguish between stockbrokers and investment advisers. Some investment advisers do not charge commissions and do not sell securities. They advise. Stockbrokers are often salespeople, paid on commission, who offer research more than experienced investment advice. A registered investment advisor may charge fees rather than commissions and may also have client-approved discretionary authority. The registered representative is held to a regulated standard of recording and demonstrating that typically all advice, purchases, fees and sales are appropriate, fair, and clearly in the best interest of the customer.


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equations; say a derivative or an option. If you look at financial or business projections on a spreadsheet, you will see that some profits are made from operations, not from manufacture. This is true particularly for banks and credit card companies," Steve added. “On the other hand, in my business we teach, and we practice, fiduciary. Not only is it in the law, it's good for business. Having a definition is nice but I find it easier to remember a simple acronym CCLOAD that reminds me and my gang about our responsibilities in every transaction.” "Is that a technical abbreviation or something?" asked Michael. Steve smiled at Michael and said, "Oh no, no. It actually stands for the elements of fiduciary: Care, Confidentiality, Loyalty, Obedience, Accounting, and Disclosure. Those are each the active parts of fiduciary," said Steve. "That is remarkable," said John, "I love that. In fact, I wish I'd had that as a benchmark throughout my career," he added. "You didn't need that, John," said Arthur Magnus, "I guess you always did those things intuitively." Steve Jones continued. "Actions that ignore fiduciary demonstrate an inability for the customer and advisor to work collaboratively or genuinely consider the future. Moreover, for any financial professional today, be it a real estate broker such as me, a lender, an attorney, a CPA or a broker, like John, action without fiduciary responsibility represents the perfect scenario for losing clients. The reason is quite simple: The active and serious investor today increasingly relies on the trusted advice of a team.”


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“The combination of tax laws, and the complexity of investments are part of the story," said Steve. But there are internal rules in numerous brokerage/bank/credit card companies that restrict their agents and employees from referring to internal products and services. To do so is called ‘selling away.’ It is easy to see how decision-making systems put the client second, after the firm.” “In these situations, the likelihood of your being introduced to a wide range of investments, much less investments tailored for you, is almost nil. I suppose, you could argue, that in real estate the client isn’t subject to the same level of restriction on opportunities. There aren't quite as many options, and it's easier for the client to find deals by themselves simply by calling another agent or searching the internet and picking up a phone. That's part of the reason the fiduciary is so useful to the real estate brokerage community. It keeps us honest," said Steve. Rita leaned forward, and spoke. "I reported on this theme a number of times," she said. “Many advisors perform their duties without acknowledging their customer’s real needs. Our survey of affluent customers and advisors supports Robert Kiyosaki’s warning that many people use advisors, in order not to have to act on their own behalf.” “I remain confident that a few advisors working as part of an investment team can be immensely valuable and I wrote about it recently," said Rita. "We need to look at wealth differently, because mass affluence and wealth have changed the roles of institutions,” said Rita. “If you follow a few rules to organize the team, you can win. This winning benefits both the customer and the team advisors.’


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“Robert Kiyosaki devised a teaching system about money and our capability for getting, managing and using it that works. Actually, it is a game called Cashflow™. The game begins with a blind selection of a character. Each character has an income, expenses and some assets. For example, a doctor earns more than a superintendent. As the game proceeds, however, each player has the opportunity to invest, as well as address events that cost. I have seen the superintendent beat the doctor’s income many times,” said Rita. "That sounds like a great game," said Steve, "one we could all enjoy." Arthur Magnus leaned forward. "This has been very enjoyable Mr. Jones, and I appreciate your taking the time to meet with us. I’d like to meet with you in order to go over our real estate investment portfolio. I like the cut of your jib, Mr. Jones, as they say. And I like very much your thoughts about fiduciary," said Arthur. "If that's acceptable to you, of course," said Arthur. "Mr. Magnus, you and I have never met. But I have met several people whom you have helped, and they speak very highly of you. I'd be honored to help you if I can," said Steve. He turned back to Rita and smiled, "I need to get going now Rita. This has been fun. Thanks." They all exchanged business cards and agreed to schedule a meeting the following week. "You look confused Mary," said Arthur Magnus to his daughter.


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Mary and Rita exchanged glances. "I'm glad to have heard this," she said. "I think women work differently from men and in many cases have a different sense of ethics in business than men." said Mary. "I didn't put her up to this, John," said Rita, smiling. John looked at Arthur and smiled and then turned back to Rita. "The Magnus family is filled by very independent thinkers," said John, "so, you can't tell anyone in this family what to think." "What's bothering you kid?" said Arthur. "I can’t help but think that there's something missing. We’ve discussed service, and the responsibility of financial service, the fiduciary responsibility…" said Mary. "Oh. I see where Mary's going," said Michael. "Let's say we've got a great team now. We decide the context of our financial decisions?" said Mary. She looked around the room for agreement but saw none. "Okay. When we make decisions in business we understand the industry, we understand our customers, and we understood our capacity. If we need to, we innovate. And we are always looking for ways to cut expenses, so we have more profit," said Mary stopping to look around the room. "Are you looking for a crystal ball, Mary?" Arthur asked his daughter. There was a silence in the room. But people began to nod


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their heads, understanding that if you had a standard of excellence in a standard for performance you would still be missing the external information. "You’ve just given me a great idea," Rita said, as she reached for her telephone, and began punching in numbers.


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_

CHAPTER 7

_____

Late Morning: Day 2

As Rita dialed, Michael rose from his chair. "Would anyone like some lunch?" she asked, still dialing. Michael looked around the room. “I think I’m going to take a little walk, grab a cup of coffee. Can I get…” he said haltingly. Rita motioned to the door and John spoke up, "Michael, I'm sure we can get coffee right here. Are you sure that..." "Thanks. It's not just the coffee. If you don't mind, I’d just like to get a little fresh air," said Michael. Michael's father nodded and said, "No thanks Michael, my coffee is just fine." Michael took the elevator downstairs and walked out the front door. Across the street was an attractive little coffee shop called Bongos, a Tiki-bar styled coffee shop with woven strips of wide grass and bamboo framing. Michael ordered his coffee and sat down near the front window looking out on the busy street. He had taken the first sip of his coffee when the older gentleman at the next table spoke to him.


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"You look befuddled, young man," said the man. "Excuse me?" said Michael. The man smiled and sipped from his cup. "You looked distracted and perplexed," said the man. And then he resumed sipping his coffee quietly. Michael looked out the window and sighed. He wanted to think and at the same time he wanted to talk. After a few minutes Michael spoke again. "My dad isn't well and he's been leading my sister and me through this maze of advice. It just seems... extraneous," said Michael. He continued, "It’s kind of a distraction from what it seems we should be doing if Dad is really as sick as, well..." The man looked into his coffee cup and that of Michael asking, "Do you mind if I join you?" "I guess not. No, that would be fine," said Michael. The man rose and walked to Michael's table to sit down across from him. "I take it your family is in business," said the man. Michael nodded. "I have had businesses myself," said the old man, "and they are more complex than most people realize. Think about selling. Most salespeople want to get the money and get the product into the hands of the buyer. And they think that’s the job. But that's very shortsighted," said the man. Michael shifted in his seat. "I know a man, Frederick Lehrman, who understands how to generate sales. Basically, he believes that in order to attain success in business, one has to earn the confidence of


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the client by providing the best service possible. In doing so, the client will have full trust in his abilities.” Michael sat looking at the man. "That's it?" said Michael. "I mean it's interesting, but..." he added. "Oh I admit it sounds a little simplistic," said the man. "But it works. Trust me," said the gentleman. "What your father is doing by asking all these questions is to teach you, and hope that you learn through his example," said the man. He rose from the table and shook Michael's hand goodbye. Without another word, he turned and left the coffee shop. The waitress came up to refill Michael's cup. "Like some more? It's freshly brewed. I call this our Happy Blend -- can't have a better day without it," she said. Michael politely declined and then thanked her. They smiled at each other and Michael stood up to leave the coffee shop to go back to Rita’s office. The waitress smiled when she saw that Michael had left a tip for her as large as his check. "Nice young fella," she said to no one in particular as she walked into the kitchen.


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_

CHAPTER 8

_____

Day Two: Lunch "Hey, Michael." Mary smiled and appeared genuinely happy to see him. "Daddy’s doctor is on the phone. Let’s go join him." "Any news?" he asked. "I don't know. I guess we'll find out right now," said Mary. Michael knocked lightly on the door and turned the handle, pushing the door open slowly. He and his sister entered and their father looked up and smiled. "Hold it Mandy; the kids have just come in. I want them to hear what you just said," said Arthur Magnus as he clicked on the speakerphone. The doctor spoke immediately, "Hi guys. Well I never would've guessed it." "It sounds like there's good news," said Mary happily. "Yeah," Michael added. “No, not quite. Not yet anyway. But, as usual, your father has some tricks up his sleeve," said Mandalay Fulani,


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Arthur's doctor of 20 years. "Tell them what I said, Dr. Fulani," said Arthur. "It seems that your father has been reading. Not just business, but reports on recent medical breakthroughs. He called to tell me about a study at Johns Hopkins on the degeneration of the human nervous system. He may be onto something, so I'm going to look into this,” said Dr. Fulani. "I'm not even a little embarrassed by this, I'll have you know. Increasingly, doctors need to listen to their patients," he added. After a brief pause he continued.“ In fact, it was Norman Cousens who addressed the need to listen to one’s patients years ago in his wonderful little book, Anatomy of an Illness. He said that people today are far better educated in medical matters than they were just a quarter of a century ago. He felt very strongly that healing is a collaborative process. And that's what we need here," said Dr. Fulani. Michael spoke up, "So there's no news." "I'm sorry Michael, no, no new positive developments beyond that," said Dr. Fulani.

ReferenceTool

According to our Trusted Advisory survey, financial advisors have a much lower sense of the importance of communi cat ion than do their customers. This may be at the root of customers’ issues with their advisors. Along the same lines, a Harris survey in 2006, reported that only 17% of the clients surveyed trust their core primary financial advisors.


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Michael remembered what the gentleman across the street had said. "Doctor Fulani, I want you to know how grateful we are. And I want you to know that we agree with you. We need to work together," said Michael. There is a brief silence in the doctor added simply, "Thank you Michael. That means a great deal to me." He promised to contact them again within two days. After Arthur hung up the phone, he turned back to Michael saying, "That was very kind of you Michael. Thank you." “Rita ordered up a few sandwiches for us,” Arthur said. She and John have a client call. We’ve got about 25 minutes to relax and have a little lunch,” he added.


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--

CHAPTER 9

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Day Two: Afternoon

The Magnus family returned to Rita Jones’s office and sat down. She was on the phone. “…your current views of work and income. You need to watch your debt and understand that there is good and bad debt. But do your homework,” Rita said, “read Kyosaki. He demonstrates how one makes decisions based on new sets of reference points. The first thing is to understand what you want from the markets and how you want to achieve those objectives. Ideally, the goal is for you to take on the role of an active owner. This philosophy will serve you well.” She smiled, shaking her head slightly as she said goodbye to her client. John spoke first. "I've seen that movie," he said. Rita shrugged and smiled. “I advocate talking about the markets, the investment sectors and occasionally having an in-depth philosophical chat about investing, diversification, tax risk and enjoyment of one’s labors. When we get into specifics it becomes painfully obvious to everyone that the client and I can't do it alone. A team is far more effective,


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efficient, timely, and informative. This is the whole secret to what makes clients very wealthy and their advisers successful. It's about trust, educating oneself, and using common sense—working with clients!” Rita added as she stood by her desk and moved toward the door. “With that said, I’d like you to attend Dick James lecture at the University’s Finance department. The topic is on the future of investments. Lecture begins at eight tonight. We have front row seats!”


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__

CHAPTER

10

______

Day Two: Evening Lecture

The packed lecture hall was filled with the buzz of anticipation. “He’s launching his new book about the markets and responsibility,” said a pretty co-ed to her classmate. “This guy blows away proprietary standards,” said another, “he shares a bunch of his best ideas—he is incredibly generous with his thoughts about preserving and building capital outside the normal constraints.” To the appreciative giggles of her friends, an attractive young girl said, “All I know, is he’s really cute!”

The Magnus family, Rita Sands, and John and Sally Dockerty quietly took their seats close to the stage. Professor James held his hands up to quiet the audience. “I would like to talk to you tonight about the future. And I would like to show you how to make a lot of money. Is that acceptable to you?” Professor James smiled as the audience of university students applauded and hooted. “There is one thing I would like you to promise me, however. My teacher Dr. Fuller dedicated his life to the benefit of mankind.” He walked a few steps to the right and again turned and faced the


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audience. “I have come to appreciate the wisdom and direct benefit of such a philosophy of action. And so I will share my thoughts with you with the understanding that you will dedicate your gains to mankind. Is that fair and agreeable?” Again there was applause. Michael and Mary looked at each other and at their father. Michael shrugged and smiled broadly at him. Professor James continued. “As never before, financial advisors and clients can decide for themselves what level of business they want to perform. Like the Chinese symbol for crisis, having a genuine functioning global economy with commerce represents both a threat and an opportunity. Under the threat scenario is a world undergoing massive substantial change in how it operates and finances its dealings. Most historians would agree that change is inevitable. Under the opportunities, new service levels are possible as never before. These run the gamut from creating interdependent long-term relationships, and not just with existing customers, to educating family members, and possibly their entire network of associates and peers, to the creation, preservation and distribution of capital at levels once reserved for the very rich. New financial advisory, which is working closely with increasingly affluent customer, functions in this constantly

Team member job #3: SCENARIO PLANNING

Consider in advance what might happen—

practice being proactive.


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changing environment. The informed advisor and client can construct inclusive and holistic personal and business planning systems and approaches if they understand two dynamic shifts. Historically, wise and successful leaders and influences have drawn key advisors together. Winston Churchill explained that this is precisely how the British Parliament was initially created, “to listen to the people.” The most successful business people practice the same discipline with their trusted advisors. Top success appear to lean on advisors: Warren Buffet depends on Charlie Munger; Donald Trump has George Ross…all billionaire’s have a trusted advisor they depend upon, and a team to further the ideas generated.

Business & Scenario Planning

Dynamic Number 2 – Owners of “traditional” and “nontraditional” wealth are not similar and see the world very differently. The annual Mendelsohn Affluent Survey reviews sales of consumer products purchased by millionaire households. People in these households are referred to as the "mass affluent" for which there are purchase patterns and corresponding desires. A few of his observations on the Mendelsohn study follow. The mass affluent watch CNN, the Discovery Channel, ESPN, A&E and The History Channel. And what do the mass affluent read Barron’s, Cooking Line, USA Today, and House and Garden. Twice as many read the most favorite, People Magazine. This distinction; we can call it the People Magazine syndrome, suggests to some observers a newly monied and non-traditionally acting affluence. This is not merely assuming that more traditional affluents would only read Town & Country. Rather, it suggests that some identification with easily-recognizable celebrities with whom they have financial and cultural similarities. Distinguishing between traditional and nontraditional affluence provides a reference point for advisors to better understand their customers’ decision-making processes. Perhaps as importantly, understanding the characteristics of traditional and nontraditional affluence provides the wealth advisor insight on their customers’ financial acumen. Traditional affluence will trend toward protection and safety; the nontraditional affluence is likely to have a more aggressive view of opportunity, time and money.


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What is the function of these people, these advisors? It is two-fold. To increase the value of the current decisions and to consider the internal and the exegetic changes ahead. That is the known and the unknown influences on our decisions. Wealth is most often created in real estate. Perhaps that is because the methods used can be duplicated and continue to throw off income. Real estate has other benefits, however. Thanks to generous tax laws, real estate can be depreciated. Many improvements to a property are also deductible and one’s tenants pay for the investment. Unlike many other investments, real estate creates value superior to interest paid on the cash invested. This is true to a similar extent in business. Many individuals are simply trading time for money, but a duplicable business can make money exponentially. Successful business is not just limited to manufacturing or service concerns, either. Numerous popular artists through history have understood this principle. One of the more famous early examples is Frederick Edwin Church. Church painted very large and glorious canvases that portrayed the Hudson River Valley of the 1850s. He observed how people were entranced by his work. As you stand before them they are, indeed, so glorious that you are tempted to reach into the canvas. He then added a new dimension to his product. The son of a successful businessman himself, Church decided to charge the public for the privilege of viewing his new paintings; and they did! Every day, hundreds of people paid one quarter for the privilege. Church became a very wealthy man. Another famous artist, Auguste Rodin, realized that there was a market for miniature replicas of his smooth, white stone and bronze sculptures. You have no doubt seen such models, still


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manufactured and sold today. They include Rodin’s “The Thinker” and his intriguing bronze sculpture, “Hand.” It is the business and not the occupation that create renewable income. Are the Rolling Stones artists first; or businessmen first? It becomes difficult to separate the two roles. So what can successful artists teach us? Wealth advisors and their clients benefit from their examples. After all, one's inability to carry a tune does not exclude you from enjoying music. The lesson is this: We can grasp our occupations, or we can thrive in flexible thinking. Remember John Lennon’s famous statement: “I’m going to write myself a swimming pool.” For his second book, “Business at the Speed of Thought,” Bill Gates traveled around the country, and held presentations for the public at Barnes & Noble bookstores.” I remember wondering why a billionaire would do this. He arrived with a contingent of about a dozen individuals, and a few people from the company. He spoke for a while about ideas from the book. And then he did something I didn’t expect; he asked people what they thought was important. As he listened his contingent took notes. He has turned his book tour into a fact-finding mission about his audience’s interests. He was making more money doing research for more money-making products. This is the art of scenario-planning. There is art in finance, as well. "It's fun to make money," says Donald Trump in a recent co-authored book. Is he an author now, or is he a real estate marketer? I would suggest to you that he is both. Ken Fisher is a very successful money manager whose firm


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manages over $30 billion in assets. The majority of money managers can appear insulated and exclusive. Not so with Fisher. Though a successful money manager, he is also unabashedly one of the most successful direct marketers in the United States. Using regular mailings to prospects—who responded to previous advertisements and publicity—Fisher encourages prospects to self-qualify themselves for his investment opportunities. It works. From his Southern California office he is now launching a campaign to roll-up (buy and combine) other independent money management firms. There are numerous firms that manage large amounts of money. What distinguishes Fisher’s firm is his individualized marketing. It is so rare in the investment industry, that the trades can scarcely write anything good about him. In a single short article “Investment News” referred to Fishers “junk mail” over 6 times. Like much of the industry, they ignore the art, choosing instead to defend the occupation. Fisher’s customers probably don’t read the investment trade publications. And Fisher likely believes the old axiom that any mention is still publicity, because it’s better to be known, than unrecognizable, in a crowd. Is educational marketing then part of financial service? And isn’t good marketing an exploration of our favorite topic—the future? There is a way to combine the effort of linking expertise, presenting problems for solution, and arriving at a most-sensible posture if the situation arises. Another aspect of the scenario planning approach is your mental preparation for other events. It is disturbing how many important decisions are made in the absence of their future implications.


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I will discuss how scenario planning helps. When I was first exposed to corporate advertising I learned something that shocked me. Many products, like cars and large durable goods, advertise to support a sale already made. Cost of dissatisfaction, returns, etc are thus addressed. Repeated advertising supports one’s decision, sometimes educating the buyer on additional benefits of a product they already own. Is that sensible? Let’s look at this proposition more deeply. Financial service advertising often appears untargeted for a good reason; it is. Advertisers, like banks, brokers and insurance companies seek a mass audience, rarely targeting a specific audience that has a specific need. Everyone is a prospect. This is a very expensive proposition. Financial service advertising is the fifth largest spending category. That should tell you something. From a marketing perspective, the shotgun approach dilutes the message of what kind of service large firms can deliver. It is a big challenge internally as well. Managing tens of thousands of financial advisors with varying skills and competencies in a single company is no simple matter. It is natural for larger firms to appeal to human instincts like pay, and promotion, and prestige, to manage the business. There are some terrific agents and employees at these firms. For the customer, the task is locating the right one for their needs. Far too often a customer’s desperation and exhaustion drives their decision to get started with an advisor. This kind of beginning has mixed results for the advisor and the customers. We are contrarians in how we view potential business. Words are important to us; we believe the use of words shows how a person thinks. This is why we choose to call our buyers ‘customers’,


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rather than ‘clients’. One tends to regard a client as a human hang file; easy to ignore, easier to take for granted. By concentrating on a customer base with specific needs, the advisor can learn about that base. After a time, such concentration essentially guarantees expertise. And expertise is very attractive to a buyer, and in this case, to an investor. And of course, this runs against the popular use of a person’s net worth statement as the core of the advisory relationship. Think about how being an expert in a market niche changes the financial advisory relationship. Let’s say you are a professional ‘hingleslagger.’ Don’t worry about what that is, or what the responsibilities are. Think of this occupation as a light blue collar job. The long hours, opportunities for incremental advancement, and bonuses for ideas and added value. Oh yes, and benefits. If you are very analytical, you will automatically question whether or not this occupation even exists in the material world. I made it up to illustrate a point; simply follow my train of thought. When you and your fellow professional hingleslaggers met at the annual industry conference, concerns arose about recent industry regulations. As an advisor, you’re looking to manage the hingleslagger’s money in a way that will provide him with all the things the television ads promise—the boat, the happy retirement, college for the kids, and a dream home. Over there is a generalist from Big and Rich, Inc. She is handing out brochures and the opportunity to open free-checking with a low introductory interest credit card with a home equity line of credit. One form! Amazing! How DO they do it? Over here, however, is a woman who says, “I love working with


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hingleslaggers, in fact, my parents were both in the guild. Are you aware of the recent H-451 provision in the tax code that benefits hingleslaggers using certain estate planning vehicles? Perhaps I can explain…” This is real life. We both know it. But I will prove it is true. Doping some research for a book, I was on a call with two upscale advisors. One is a very knowledgeable wealth advisor from New Jersey whose name is Larry, familiar with our Trusted Advisory processes. The other was an advisor, named Becky, a Rhode Islander, new to our program. Larry asked her about the customers she serves, many of them owners of real estate firms. Like most advisors, bringing in assets is a primary focus of her work. That this is a mistaken concentration becomes evident in a single exchange. “Have you considered introducing them to the benefits of a GRAT?” Larry asked Becky. For those unfamiliar with it, GRAT stands for grantor retained annuity trust. The important point was that Becky, the professional, didn’t know. “What is that?” she responded. Larry went on to explain the purpose and the estate planning advantage of this for Becky’s target group. But, it was not in her primary client’s interest, much less hers. Her energy was pointed at simply bringing in more money. It was a missed opportunity in her market. Larry, by the way, was recently promoted as a Wealth Manager in New York at a major firm, where management tends to leave him alone. They are very smart in my opinion to do so. Service objectives are easy to meet when expectations are clearly


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stated and agreed upon. The same technologies that allow us to instantly access learning, research and performance also enable lifelong relationships with smart wealth advisors. Sales legend Tom Hopkins, says that what has changed in the service component of selling is that sales people don’t communicate as they once did. “Before the internet, I always sent hand-signed notes to my customers, who became wonderful loyal customers for me.” How much difference can simple communication make in dollars? Dan Kennedy, the highest paid copywriter in the United States and a marketing expert, provides an answer. Kennedy tells the story of a dentist who started sending signed notes to people who did not sign up after the case (a dentist’s sales) presentation. The follow-up, Kennedy says, agreeing with Hopkins, is powerful for the customer. Kennedy, who measures everything when he markets, tells of a highly contented doctor. “His business from those almost lost patients is up over 40% this year,” Kennedy says. Growth like this is unthinkable for most people. There's something important to acting responsibly in an ongoing professional relationship. Large organizations and many professionals have simply undervalued how technology is changing how customers work. As we shall see, those wealth advisors who succeed in a big way are addressing their customers’ emotional needs. One of the biggest customer needs is a feeling of security and peace of mind that comes with a commitment to fiduciary. And obtaining and building on fiduciary will be the hallmark of future global wealth.


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CHAPTER 11

____

Dinner: Day 2

Arthur Magnus grinned at the faces around the table. “This has been a very interesting day,” he said, to no one in particular. “Michael, what did you think of the professor’s ideas about the future?” Rita Sands, John Dockerty, and Mary all turned to Michael. “I haven’t really prepared any comments…” said Michael. The throng sat back and laughed politely. Mary chimed in, “that was a bit of a set-up wasn’t it Michael. Not fair Daddy.” Arthur shrugged as Michael began to summarize his thoughts. “I thought Professor James’ ideas fit very neatly with our day-long conversation,” he said. “I mean, think about it. John and Rita discussed the changing nature of service. They explained how the challenges are greater than any one adviser can handle, and that a team adds balance and integrity to the solutions finding process. Add to that the concept of fiduciary that shares responsibility and accountability, and we end up with principles of value that create the foundation of long term sustainable business practices. The trust factor is that much improved by


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acceptance of ownership of the results—if not a sense of stewardship of the capital itself,” concluded Michael. Michael shifted in his seat and took a sip from his water glass. “It is still a little academic, though,” he said. “As if we have been to school and are ready for the exam, but we have no specific actions we can take to activate the service, fiduciary and scenario planning models, and I think, that is leaving me wondering, ‘so what?’” he said. There was a long silence before John Dockerty spoke again. “If you can manage another day like today, I have something that will provide structure to everything we have learned today.” “If we can start early, I am in,” said Rita Sands, “I have a few afternoon meetings beginning with lunch.” Everyone nodded in agreement. “Great then,” said John Dockerty, “let’s meet at Nelson’s for a breakfast meeting. I’ll book the small dining room.” As they rose to leave, Arthur Magnus’ cell phone rang. It was Doctor Fulani.


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_

CHAPTER 12

____

Breakfast: Day 3

“I’ll have a Western omelet and coffee,” said Arthur Magnus to the waitress at Nelson’s. “Little cream, please,” he added. He pointed to Michael to place his order.

When we start off in life, said John Dockerty, we don’t know much. You might say that we don’t know what we don’t know.

John Dockerty continued. “I think you will like what I have to show you, Michael,” he said. “You mentioned not seeing the elements coming together yesterday in what we all heard. And I felt the same way. I was thinking about how we could bring the academic parts, as you called them, together in a way that would make sense and make money. And then I remembered a project I had worked on a few years ago. I want to show that to you all—now.” With that, John Dockerty brought out a leather bound manuscript and placed it on the table. “Now,” said Michael, “how do we put this philosophy of active advisory and trust in advisors into manageable service?” John smiled and said, “I thought you’d never ask.” Every shared a hearty laugh.


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John Dockerty's

handwritten notes

* Understand the

“partnership” role of

the business plan.

* List personal

reasons for

developing a business

and a business plan.

* Identify resources

where you can get

help in creating your

business plan.

* Identify the

quantitative and

qualitative information

that supports and

challenges your

business concept.

* Have your business

plan outline in hand.

_

CHAPTER

13 ____

Essential Plan #1 The Business Plan Experience Level #1: We Don't Know What We Don't Know aka Unconscious Incompetence

Michael took the wire-bound document from John Dockerty’s hand. “What is it?” he asked. ”Do you remember how I told you I’d done a lot of research into how I could deliver more of what my clients were telling me?” Michael nodded. “My firm wasn’t especially interested in how I could change what was working, then. They didn’t see that the changes were coming fast in the financial services arena, with discount


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brokerage and newsletters for individual investors,” he said. Michael smiled. “Sounds like a professor of mine in grad school,” Michael said and smiled. “People seem to resist change most when it forces them from their comfort zones. It takes commitment and courage to pursue something different. I am afraid I was focused on making ends meet. I didn’t pursue my ideas sufficiently. But, neither have I left them behind. You have some of them in your hand. And they have been working for us—your Dad and me - very well for quite a while,” said Dockerty. And then he added, “I’ve got a few calls to make. Have a look. I think you’ll see the same pattern that I saw so long ago.” He rose and left the room. Michael turned over the cover of the document. The first page read: "Outline for Arthur Magnus..." And then beside that it was dated September 16, 1970. He began reading.

Outline for Arthur Magnus -- September 16, 1970 INTRODUCTION TO RUNNING A PROFITABLE BUSINESS

More often than not, we begin our first business with less thought than we use to plan our summer vacation.

In developing the concepts of lifetime investment, we found that employees often believe that they don’t need a business plan, because they have no business. Such people

“Life is what happens when you're busy making plans” -- John Lennon


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misunderstand the true purpose of a business plan. Business people have said they don’t have time now, or they’ve never used one and they’ve done okay. Corporate employees say they don’t need a business plan because they work for a company that has one. Retired people simply say, I’m retired and cannot be bothered! These limited views are dangerous for the same reason. They do not account for the speed of change in an individual’s life. They do not account for economic shifts or social and political shifts. The majority does not under-stand how a proper business plan can contribute economic value. Countless experts teach that a business plan is a document used to secure financing. And while it's important, it is not the only or best reason to create a business plan. The small business administration estimates that over 2 million businesses are created each year. Most of those are financed through conventional loans secured by personal property or through government guaranteed loans. That’s the up side. Logic and statistics show the high risk of failure for a new business is over 50%. The overwhelming fact that the lender will usually want your primary home as collateral, should tell you something. What is your role as a businessperson? You will have spent countless hours, including weekends and vacations planning, mounting, selling, and profiting from your labor. Are you going to get, or are you getting, what you want from your business? Is it important to you that your community benefit through the products and services created by your business? If so, is it


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important to you to build the church, civic organization, or other organization into your plan? Is it little surprise that this country, the United States of America, has the largest number of entrepreneurs per capita anywhere on the planet? The United States is truly unique in having the resources, education and political and economic support to start numerous businesses from the seed of the simple idea. Still, other countries are also experiencing high levels of entrepreneurial activity; among them India, Thailand, China, the countries of Eastern Europe and South American countries, like Panama and Brazil. It may be useful for you to consider including these areas in your plans.

There's a good amount of “pre-thinking” about your business that will help you in the long run. What’s behind your drive to build a successful business? The size of your business is directly related to the size of your dream and your aspirations. Have you built that into your plan? When he was a boy, Andrew Carnegie knew he would spend the first half of his life building a fortune, and the second half of his life giving it away. Clarity matters. It comes from our fascination with our business problems and challenges. Here are a few areas useful in envisioning your business. PURPOSE: What is your purpose (with this business)? Is it about maintaining a lifestyle? Do you want a business you can sell, once it is profitable?


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Do you want a business that can be merged with another business to increase opportunities in an industry? Do you have some other objective; maybe one that others have overlooked?

There are many ways to express opportunity, but here is one of my personal favorites. Is your purpose large enough? Robert Schuller has a memorable expression for this? "Make your plans big enough to let God in." MOTIVE Are you in business for profit alone? Are you interested in learning about something while you profit? Is this a business you want to pass along to your children or grandchildren? Is this a business that will provide employment to your family, your parents, or other relatives? What do you want, and not want, to do? MISSION This is perhaps the most misunderstood concept in business. A mission statement is not an airy proclamation of goodwill. What is your conceptual commitment to the business and to your visionary "summit?" In other words, this is your big objective. Bill Gates wanted a computer on every desk. Ben & Jerry wanted to make premium ice cream that connected with their strong social values. What’s your mission and big objective? Don't envision some messianic statement of what the future holds. Do a reality check. What are your perceptions and beliefs about how your business will meet your objectives? Take time to do a realistic analysis of the opportunity you think you see. Consider its acceptance in the marketplace and its profitability factor. Now check your goals again, and consider making them bigger.


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Reference Tool Watch TV, Make Money… Sort of

Our role models are key success indicators. The Sundance Channel produced a program called “Iconoclasts.” One high profile (and intelligent) celebrity cross-interviews another high profile (and intelligent) celebrity. This high level eavesdropping is fascinating as we listen to the discoveries the co-hosts make about each other. Awkwardly. Imperfectly. And wonder-fully. The Hollywood producer, Brian Grazer, interviewed Viacom’s more reclusive Sumner Redstone in one episode. What was apparent was that these busy, multidimensional and thoughtful moguls are also personally interesting. Their complexities become more human. They are “genuine” people. Openness, as clumsy as it can be, is desirable in real life business partners. Programs about the rich can feed on their oddity. The 1980s program “Dynasty” captured Americans imagination about the rich and famous then, just as it does in dubbed reruns today around the world. Today, in the US there are “rich story” cable offerings from the BBC (“Hotel Babylon”) and network television (“Dirty, Sexy, Money.”) We may never lose our fascination for the stories and quirks of super-wealthy people. Especially when they are made up by script-writers. Locate solid role models on TV, or elsewhere. They are out there.

VALUES These are the statements that define your character. Are you open to new ideas? Are you interesting to be around? Are you comfortable around others? This is your foundation. This is the place where sense and soul meet and become how others will see your business. It is here that we will begin our journey to fuse the vision necessary for you to succeed in your life’s objectives. We begin with a document called “Economy or Not Economy,” that I created several years ago.


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This document has proven to be one of the most effective tools that I have ever used. Basically they follow the principles of business prescribed by Peter Drucker:

One: There are two Purposes of business: Innovation and profit. Two: Doesn’t work? – Work it out or drop it. Three: Too hard or costly? Refine it, and then review number two. Four: Unhappy with your results? – Start again Five: If you run out of motivation. Get a job.

Use positive reinforcement to position any idea, product, event, service, speech or presentation, even an acquisition of a business or property. As you begin working on the document “Economy or Not Economy,” you will begin to formulate what you would like your business to look like and how you would like to position it in this global economy. Careful preparation of a solid business foundation is imperative if you are hoping for long term success. Let’s begin. The biggest single error people make in their economic lives is the failure to focus on their strengths. We are told to “get better” at many things for which we simply have no aptitude. Find what you like and are good at, and you have doubled your chances of success.


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Everyone who starts a business begins with some hesitancy. Committing to something you aren’t expert at is tough. An idea or a theory about business is very different from actually getting a business off the ground. The very successful succeed because they understand the power of building teams. Oftentimes that team begins at home, with one’s choice of spouse. The importance of a sustaining a supportive environment is tantamount to one’s success. Financial advisers speak of trust. There are very few people alive who understand the importance of trust better than a successful entrepreneur. It is virtually impossible to achieve great success without trust in others. As behavioral psychologist and author William James writes, those who are inspired by a shared goal often have a level of commitment that is greater than any financial incentive. This would apply not only to the client-professional relationship, but also to the relationships shared with and ancillary professional. Simply put, there’s too much to know to try to go it alone. Working as a team protects the client, keeps the financial professional from promising too much, and builds a referral network of significance. The business plan is much more than a document and a series of business management steps. It is a clear visualization of what is possible and an initial idea of how that possibility can be achieved in a specific period of time. Many successful people never create any other documentation other than those required by law needed to establish their businesses.


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At the bottom of the page Michael saw the last margin note from John Dockery, which read: “What if there’s not a clear right or wrong?”


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CHAPTER

14 ____

Strategy Shift Michael rubbed his eyes and took a sip of his Earl Grey Tea as he read. At the top of the next page was another handwritten note with a new title, "On Business Strategy." Below that, a second note which read, "A presentation to the Senate leadership conference in 1970." "Wow," said Michael aloud. And then he read the typewritten pages.

Sometimes it's smart to change strategy; sometimes it's smart to leave it alone. It's not necessarily external conditions that change; it’s usually our own perceptions that change. Ideas go in and out of style. What’s important to understand is what changes are occurring in our world and what has precipitated these key changes. It is important to first define your terms, in order to encourage communication and complete and proper understanding between all parties involved. In our Trusted Advisory practice, we encourage financial advisors to be transparent


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in their business dealings. This promotes trust and confidence. We also promote the careful use of language. Words are powerful tools. They can help you achieve your objectives, or they can hinder you from achieving your goals. Here are a few examples of words along with their definitions that we like to use: “Address” is also a verb. When we address an issue up front it's an active process. To address is to put on the table, to make something known. This is precisely what a professional who offers advice is supposed to be doing. Financial advisers and others for their part are also under an implied fiduciary responsibility, in which case openness is a business building merit. Education has an uncommon meaning. The first meaning provides an interesting opportunity for us to illustrate the difference between "indoctrination" and "education." Education comes from the Latin word "educare," which means to lead out. Indoctrination is something more akin to persuasion or brainwashing. Value and values are distant cousins. Value represents an intrinsic and absolute concept, while values are relative. We might say that your value to each client increases as you discuss important personal investment


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decisions. Value is a relative term because the relationship and roles take on different meanings depending upon the individual client.

The Struggle with Values It is important to address the topic of “failure.” Many of my clients have experienced failure; actually, I have learned that the number of failures any given person experienced before meeting their success averages about 11. Eleven businesses, eleven jobs, eleven titles. What mattered were their drive, and their ability to pick themselves up, dust themselves off, and start all over again! The advisor’s challenge is to recognize their client’s fear of failure. This may include a realistic evaluation of their expectations, in order to determine whether or not these are attainable.

When creating a business plan, follow a model that has a proven track record; one that may move you to think outside of the box. However, often times, this is precisely what one needs to do in order to increase your chances for success. It is also important to work within an environment that best suits your needs. In today’s market, many are choosing to work from home. With both parents following their own


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career paths, many find that working from the home is more conducive for achieving ones goals, while maintaining a healthy and successful family environment. Values also have a lot to do with the longevity of your business.

I was interested in this idea and pursued it further. My hunt led me to a brilliant man, IBM Founder Thomas Watson. In Watson's book, "Of Business and Its Beliefs" he wrote:

"Of the top twenty-five industrial corporations in the United States in 1900, only two remain in that select company today. One retains its original identity; the other is a merger of seven corporations on that original list. Two of those 25 failed. Three others merged and dropped behind. The remaining 12 have continued in business, but each is fallen substantially in its standing. Figures like these help to remind us that corporations are expendable and that success, at best, is a permanent achievement, which can always slip out of hand."

Presumably, and I say this only


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because they were publicly traded, the companies that Mr. Watson mentioned had business plans. The point: There is a lot more to a business plan than putting "a good idea" to paper. Michael opened a folded sheet of paper that read: ADDENDUM 2007 The Real Purpose of a Business Plan

The undertaking of creating a business

plan involves the exercise of thinking

through the boldest administration, operations, marketing, financing, and

taxation requirements. An investor looking at a company is most likely to

care only about the financial

projections. These are the folks who believe that accounting is the only

language of business, and this can stifle new ideas and new business

possibilities.

I prefer to create new opportunities

by promoting business practices that are innovative and stimulating, such

as through the practice of

concentrated marketing.

Let’s look at this concept further.

The starting point of rethinking our

financial and life plans, and managing them effectively, is to acknowledge

that:


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We don't know what we don't know.

We watch a parent drive a car and because it looks simple enough, we

believe that we can drive too.

The creation of a business appears at

first, to be the road to riches. We get the financing, we target the

market, we have the plants and

facilities, we have the employees, and we've done some marketing. Where's

the guarantee of success? The fact is; there is no guarantee.

In their December-January 2006 issue,” Fortune Small-Business” followed

corporate retirees who purchased business franchises in everything from

muffler repair to fast food. Most of

those who own a franchise believe that their franchise has at its core a

pretty good business plan. The franchise possesses a tested process

and system, marketing materials and

strategies, top quality and low price vendors, hiring and firing

documentation. But even with a franchise the franchisees face

everyday business challenges. The verdict of these retired, would-be

millionaires: "It's hard to tell in advance who really has the skills that

will make a franchise work." In other

words, it's hard work, no matter how good the franchisor business plan.


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Michael smiled when he returned to the main text to read the next notes. The label read “OVERHEADS.” Overheads, Michael thought, smiling. I remember those! Basic Business Plan Questions for Overhead Slides: Business Plan Questions Business Summary/Overview What is the concept of the business? What is the current situation of Company's services' concepts? What is necessary for the business to succeed? What is its current financial need?

The Business and Its Mission What do you foresee to be the nature and scope of this business? Who is the prospective customer and what are his needs? How do you propose to satisfy those needs? How do you differ from the competition? In what direction do you propose to grow and expand? What are your benchmarks or milestones for measuring progress/timing? Market Review What is the market opportunity for the Company's services' concepts? What changes do you anticipate in the marketplace and when? What target market or customer segments are you aiming at? What are the characteristics of the ideal customer? What are these customers' needs in view of your product? How will these customers evaluate your product and make decisions?


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Competition Who are you competing against? How do you compare in price, quality and service? Why do you think you can compete with them? What opportunities do you see that competitors don't see? Why are competitors not satisfactorily meeting the needs of the customer? What threat/risks do competitors pose? Business Strategy What are the competitions' strengths and weaknesses? What are your strengths and weaknesses? What is your plan to capitalize on your strengths and their weaknesses? What is your plan to overcome their strengths and your weaknesses? What is your implementation plan and timetable? Products and Services Description of products offered. Marketing Plan How will potential customers know you exist? What is your marketing strategy? What advertising do you intend to do? What promotion will you offer? How will you get publicity? Operations Organization chart. Key employees: names, positions, expertise. Action program: who performs tasks and when. Human resource plan: this includes pay and benefits. Financial Projections Other Considerations State the reasons why you are sure your Company's services' concepts will succeed, or anything else you may need to convince someone


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to invest in, or finance this business. And now, look at your business differently… Some advanced business planning. Open your eyes to your differences. Ask-- Are you working in a commodity or a specialty business? And …for those working inside a larger company TRY THIS! Sample some deep-coaching questions. See your situation with new eyes. Come on. Play along--answer the following questions about your work. - What goes on around here? - Can you give me an example? - Why does that happen? - What does that look like? Your responses to these questions can provide you with some insights on your self. How did you find these questions—Difficult? Funny? Stupid? A combination? Learning more about our motivation and those values which help us to govern, give us unimaginable leverage over our individual challenges. Now and for the future.

And ...if you're an entrepreneur, or work in a small company, TRY THIS!


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Here are some sample questions. Try seeing your situation with new eyes. (Come on. Play along and answer the following questions about your work-related preferences.) Have you been successful in developing business opportunities? Or, have your found you work better with some structure? Do you prefer working in one place, or do you need to move around? Do you like to develop long term relationships? Do you easily see others' point of view? Does this need to be pointed out to you? What are you willing to do to achieve your goals? Your thoughts around these questions begin to give you insights on your self. Simple questions asked by a trained business coach, unearth key insights and expose the blind spots that are the cause of our troubles. Sometimes we just need a boost, a good idea, something to reassess our thinking. Here are a few ways to start doing that and to keep doing it in your business life.

• Consider volunteering time to an organization that works in an area that you really care about.

• Seek the advise of a personal guidance counselor in order to understand your character and talents so that you might


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benefit from this knowledge.

• Keep a journal. Record your dreams, daily activity, ideas and concepts.

• Join or create a mastermind group.

• Find and use a mentor.

• Take 15 minutes a day to learn something, or

to develop a new skill.

• Remember, we are all one skill away from success.

• Use a tape recorder to record your thoughts and ideas. Transcribe them later and then consider how they might move your dream along.

• Create a new list of 10 ideas every day.

• When you are really ready to make changes and do what needs to be done, hire a coach. A trained business coach asks simple questions that enable us to examine our strengths and weaknesses. In advanced coaching, we learn about our motivation, and our governing values. This gives us unimaginable leverage over our individual challenges, now and in the future. Thank you. JXD

Michael put the document down on the table beside him. He stretched his arms over his head as he considered the treasures and tips he had just read.


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[A tool that will generate useful ideas and activate your ability to follow through on can be found in the

appendix. It is based on the concepts Michael read about in the library.]


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CHAPTER 15

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Reality Check “So what do you think?” asked John Dockerty. Michael had been so absorbed by the paper he hadn’t noticed John re-enter the library. “I’ve never seen anything like it. You’ve put your finger on the intrinsic reasons behind creating a business,” said Michael.


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"With all the changes—the internet, high speed transportation, financial wizardry—making money is still about taking action and doing so quickly,” John replied. “What do you think successful business people have the most trouble with?” he asked Michael. “That’s pretty easy. You don’t need to be a Buddhist to know that one—they cannot let go” said Michael. John laughed out loud. “Yes… you’re right there,” he said. “There is a specific area that hurts the longevity of their business, though. And that is what I explored in the next segment of my study,” said John.


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CHAPTER 16

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“Soon we must all face the choice between what is right and what is easy.”’ -- Professor Dumbledore

Essential Plan #2: The Succession Plan

Experience Level #2: We know what we don’t know

aka Conscious Incompetence John rose from the table and pointed at a brass plaque on the wall. “A few years ago, I conducted a survey of top financial professionals that asked whether their firms had succession plans in place. Less than a third had a succession plan,” he said. “This interested me, and I wondered about what consequences this could have in both financial and social terms,” he added. The detriment of not having a succession plan becomes obvious with competition for talent. Your most talented leaders and thinkers may not stay if they perceive a better future elsewhere. Even clients perceive that minus a


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succession plan the organization is unstable. Our surveys consistently suggest that as advisers reach a certain age, or possibly suffer a serious illness, clients are 50 to 80% more likely to begin a search for a new advisor. A succession plan suggests forethought. It acts as an example of good business behavior. And it is really not that difficult to put in place. One of the most successful corporate examples of a succession plan is Northwestern Mutual's purchase of the Frank Russell Company. Prior to his retirement from his family firm, George Russell sought an acquirer that would match the expectations and values of the Frank Russell Company. He found such a partner in Northwestern Mutual. The institutional advisory firm had been privately held. George Russell and his family owned 60% of the company. The remaining 40% was held by company employees. After the acquisition, the company kept its name, management, headquarters, culture and employees. At the time, the match was described this way: “Each company's core products are unique, differentiated and demonstrably superior within its own industry.” The acquirer saw Russell as having the "same integrity, the same deeply held human values and the same single-minded dedication to its customers that made Northwestern perennially one of Fortune’s ‘Most Admired’ companies.” For its part, the Frank Russell Company had pioneered the ‘manager of managers’ concept, managed and marketed the Russell 2000 index, and advised on $1 trillion in client business. Specific terms of the transaction were not disclosed.


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The two largest succession plans of all time are linked together. In July of 1998, Bill Gates appointed Steve Ballmer as the CEO of Microsoft in 2000. The press release for Microsoft reported that the "promotion is part of Gates' plan to broaden Microsoft's leadership so the company is well placed to take advantage of the many new growth opportunities ahead. Ballmer's new role will allow Gates more time to focus on Microsoft's long-term vision and product strategy.” In early March of 2006 the New York Times reported that the 75 year-old Warren Buffett had "selected an executive who will eventually succeed him." On June 16, 2006 Computerworld ran the following story. "Microsoft Corp. Chairman and Chief Software Architect, Bill Gates, plans to move away from overseeing his company's day-to-day operations in July 2008 to spend more time working with his foundation.” You don't need to have seen the Net Jets advertisement in a business magazine to know that Bill Gates and Warren Buffett are friends. It is impossible not to know that they speak regularly. Still, the June 26 story (NPR) surprised most people. “Warren Buffett, billionaire investor and founder of Berkshire Hathaway, has announced he is donating much of his fortune to charity. Over time, most of Buffett's $44 billion in stock holdings will be given to the Bill and Melinda Gates Foundation. He added more in the conference to the story, NPR and others left it out. "I feel terrific," Buffett said at a meeting Monday at the New York Public Library and monitored by


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Webcast. "This has been coming for 50 years; the exact method became clear in the last year." There are tremendous lessons in the story. Wealthy people are very decisive. Wealthy people are in control of their destiny. And, most importantly, wealthy people have succession plans when they have a successful business. Or do they? This story appeared in February 2007.

NEW YORK — Moving to shore up its top management ranks, Charles Schwab (SCHW) said Wednesday that it has named Walt Bettinger the brokerage firm's president and chief operating officer.

It's a development that may put him in position to someday replace the company's chief executive.

The appointment, effective immediately, means Bettinger, now executive vice president and head of Schwab's Investor Services unit, will become chief lieutenant to company founder, Chairman and Chief Executive Charles Schwab, who is 69.

Wall Street has long been wondering what the company's succession plans will be, and David


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Trone, an analyst at Fox-Pitt Kelton, said in a research note that Bettinger's promotion "essentially signals his place as the clear successor to the company's namesake founder."

Shares of Schwab rose in early trading Wednesday.

Hopefully for Mr. Schwab the transition will be smoother this time. Two years earlier, Fortune magazine had covered Mr. Schwab's efforts to sustain his company’s growth and then extricate himself from the day-to-day operations. He had handed control of the Corporation to his trusted number two man, David Pottruck. It wasn't as smooth as anticipated.

On Monday morning, July 19, the board met as it usually did, but this time Pottruck was asked to leave the boardroom. He wasn't summoned back. An hour later Schwab called him into his office and gave him the news: Pottruck's run was over, and Schwab, then 66, would be returning as CEO.

So ended one of the stranger succession sagas in recent memory--not the all-too-common kind in which a founder can't let go and sabotages his protégé, but rather a case in which everybody tried to do the right thing but somehow got it


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all wrong. So, too, began the latest chapter in the death-defying story of Charles Schwab, the man and the company.

All three of these men ran public companies. One is having a more difficult transition. Our task is not to analyze the succession models, but to underscore their importance.

Personalities play a big role in a succession plan. But so does a clear-cut direction. As noted above, Warren Buffett dealt with succession planning issues almost from the very start of his career. And it's almost certain that this topic came up in discussions between Gates and Buffett when they were alone.

Benefits of a Succession Plan Valuation Issues of a Company

• Client/Customer Retention • Asset Turnover • Net Margins • Industry Growth Trends • Debt Levels • Length and Stability of Client/Customer

Relationships • Billable Services and Receivables

Big mistakes that stem from failed succession planning can lead to company failure, They include:

• Fearing the boss • Accepting without verifying


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• Losing curiosity or connection with your buyers

• Softening of commitment to success

“I see what you were saying before,” said Michael. “Sleepiness in business management is a potentially big threat for family businesses and even publicly traded companies. Do you have any idea of how much is represented by companies without succession plans?” asked Michael. He was squinting slightly, as he considered the figure for himself.

”Corporate businesses actually represent the lowest number of employees and income distribution,” he said. “About one third of the economy. Take the remainder and apply the unplanned succession figure and you’ve got trillions dollars of capital uncertainty,” he said. “It’s not necessarily going to be bad news for all these businesses of course. But they are very likely to have some additional problems with staff and clients, due to a lack of confidence in management.”

“And you believe that a succession plan at least considers the negative prospects?” said Michael. John leaned forward. “Succession provides the management and the owners of the business with useful financial information and customers with a sense of stability. For any businessperson with discipline is essential.”


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CHAPTER 17

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Essential Plan #3: The Estate Plan

Experience Level #3: We know what we know aka Conscious Competence John rubbed his hands together and continued. “Trend watchers have come to believe that a good estate plan is a teaching tool for financial literacy. The legacy is more about the knowledge than the assets. Of course, the inheritors have a different view at first. But if the arrangements are in place, their structure tells the story of how to grow assets. One night I wrote the essentials of the estate planning process. They coincided with a terrific acronym--MAP. This is what I wrote down as the interdependent pieces of the planning process.” He handed Michael a well-preserved sheet of paper which read:

Management Accumulation

Philosophy “You can’t tell most people—especially people like your


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Dad—what to do,” said John. “I learned years ago though, that I could coax him to think about decisions differently. I started by getting my mind clear of any agenda I might have had. Then I listed the areas where I was unclear about your father’s approach, his vision, or his commitment. And I would then ask questions around those points. The simpler the questions, the better the conversation. It was rough at first. I probably sounded like a schoolteacher, and Arthur seemed to resent my questions a bit. But I got better quickly. I learned to ask the questions in an off-handed way. Like, “Arthur, how would you react to…” If he made a statement that sounded final, I might probe it. Once I remember asking him, “What’s important about that?” He stopped for a moment. It made him think. And I knew I was onto something very important and helpful. I’ve been reading about people who do this kind of questioning to help executives, coaching them through difficult decisions or choices; just like I did with your father. This detached way of speaking with someone is very effective when you work with people for the first time. You get pretty good at spotting inconsistencies or character strengths when you ask a question with no agenda other than listening for the truth. Locating someone trustworthy is important when you are working with someone as successful as your father.


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It becomes challenging when you have to add in several people and get them to work together, but it is necessary. I used to explain it by saying we were accumulating assets, and that some of those assets were going to be good people. This was no time to surrender to the status quo. Let me show you how it works when we put together our teams for development projects and co-ventures,” said John. And then Michael began to read from a sheet in his hands. At the top of the sheet he read in bold letters the title: Living by Example Toward Creating a Billionaire Team The text was followed by another curious line… About Leading a Quest John continued, “There are broad changes ahead for protecting and managing wealth. First of all, the amount of money changing hands is the biggest in history. It is at least twenty-six trillion (that’s with a “T”) and it may be as much as one hundred trillion.” He continued “Current projections and advertising are based on varying degrees of accurate information (and the courage to change direction). Sixty-five (65%) percent of all net worth is controlled by people over 50. Seventy-five (75%) of all pharmaceutical sales are to people over 50 years old. Women make eighty percent (80%) of our household


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spending and healthcare decisions.” John stopped and looked at Michael, then continued. “None of this is static. All these numbers are likely to increase…. On the other side of the equation are the professionals. Popular management wisdom says the top five percent make up the aggressive, can-do portion of an average company. These are the self-motivated, self-starters who need little help, training, or support. The remainder, according to this generally accepted wisdom, is the corporate bloat called middle management.” Again John paused and looked in Michael’s direction. “In the financial advisory industry, we refer to it as the trusted advisory segment; the figure is more like 2%. That’s right; about two percent know what they are doing, what their customers need and anticipate and are prepared for future needs These few are committed to constant improvement in this work. This we interpret to mean continuous wealth generation for them AND their customers.” Now John paused to sip water from a glass. The glass was touching down when he continued. “They do it through simplified management of complex teams. And why does anyone need a professional team? Just think about the complexity of investment strategies…. First, you have the investment itself, which consists of equities, bonds, and alternatives like real estate, commodities, agriculture, rolling


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stock or livestock. When you invest in equities, you must consider the following: Are they domestic or global? Are they large, mid, or small cap? And finally, do they provide core value or growth? The same is true with every investment strategy each with its own jargon, culture and assumptions.” Michael considered a question, but settled back into the chair filled with warmth at the complex of issues his new friend was describing. John’s patter continued unabated and passionate. “The strategy breaks down further. Assume for a minute that you are successful. As your advisor I also need to know, maybe even determine and advise you on, your legal structures. Should you own through an LLC? A corporation? Do you want your assets in trust? How will this affect your taxes? Are there tax credits? Are there allowances? What's the timing -- long-term or short-term? Overlay all this with related business decisions. Determine location, staffing, equipment, business concentration and administrative costs. It all expands quickly. Each step can become a landmine if it is not monitored, changes in the law addressed, and if the element is improperly integrated into the whole picture. It's precisely for this reason that most people lose so much money over their lifetime. Is that because of ineptitude and incompetence, or over-confidence and hope? Either choice nets you a


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loss. And, potentially that also brings exposure to legal action. In the new world that means the client and the advisor, by the way.” Now John paused and smiled as he looked at Michael. He was really enjoying this deconstruction of the process, thought Michael. A breath and John continued. “One person simply cannot obtain sufficient information to create, plan, and maintain any financial decision of consequence without substantially educating the customer. When you build a house you (or your contractor) hire licensed people with specific skill sets such as a bricklayer, an engineer, a plumber, an electrician, a sheet-rocker, a tiler, a flooring installer, and so on. Do you really want to have these people working without complete engineering and architectural drawings? Would you permit them to work without a licensed and bonded foreman to orchestrate these different trades? To do so could prove disastrous. But everyday, people have their financial house maintained in just this way. They visit with the attorney who serves them expensive bottled water they pay for dearly. They listen to their accountant who baffles them with arcane tax code citations to show his brilliance. They might visit with their insurance agent, who may encourage further reduction of risk through a policy update and rewrite.


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But rarely does any one of them bring the plan together. And that is an outrageous situation. I guarantee you Michael, this is the real and mediocre world of planning for the majority of Americans!” John stopped and, now, rubbed his eyes. Disappointment ran through his being at that moment. He sat back in his chair, sighed deeply, and looked at the ceiling for a moment. Michael swallowed hard. And they each sat in anxious silence for a long moment. It was as if they were waiting for a train that was running much too late.


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CHAPTER 18

_____

“It does not do well to dwell on dreams

and forget to live.”--Professor Dumbledore

Essential Plan #4 The Wealth Plan

Experience Level #4: We don’t think about what we

know aka Unconscious Competence That night Michael slept and had a dream in which John Dockerty asked him one question: “How is it that you’d expected to live?” Dressed in a red suit with white piping John quoted Will Rogers…”Buy stock low sell it high… doesn’t go up? Don’t buy it” In the dream Dockerty smiled with a big clown smile for Michael. Michael said, or did he ask… “Legacy. A teaching tool.” “Think about it,” said John. “All the great spiritual masters espouse some version of the golden rule. This is the master golden rule—to leave the world a better place. Isn’t it so?”


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CHAPTER 19

____

The Meeting

Dr. Fulani called and seemed quite agitated. “I have been trying to reach you for days!” said Dr. Fulani. What have you all been up to?” Mary was surprised and anxious. She had never heard him speak so fiercely. “Well, Daddy’ is in the other ro--,” but she was cut off. ”Not your Daddy, Honey, I need to speak with John Dockerty. I know that he is with you all and I need to speak with him at once.” The doctor was persistent. Just then she heard here father’s laughter and John Dockerty’s voice. “I think I hear them now Dr, Fulani.” She put her hand over the receiver and when she saw the two men enter the room—said “Shhhhhhh!” And then whispering loudly said,” It’s Dr. Fulani!!!” Arthur Magnus stopped. His hand reached toward the receiver as Mary drew it slightly back. ”Daddy, he wants to speak with Mr. Dockerty.”


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John shrugged and, smiling, took the receiver. The room was silent. ”Hmmm. Hmmm. I know, yes sir. Yes, Doctor, I understand. And thank you.” He hung up the phone. His shoulders slumped a bit and his chest heaved with a heavy sigh. He turned to face the room. “Arthur, kids… as your advisor, I have some news I am required to share with you. “ Arthur reacted swiftly. “John, I think we should…the kids… my medical proxy… it’s…” Then, he appeared silently thoughtful as he lowered his head. John laughed lightly. “Arthur. My God, Dr. Fulani tells me you are as strong as an ox. A little cholesterol, which a glass of red wine will probably cure… you have all the time in the world,” said Dockerty. Michael looked around confused. “Then what is this all about? If Dad’s ok then what is the suspense? I mean if we all—“But then John raised his hand to quiet him. And Michael froze. “Dr. Fulani has been trying to reach me. Thank you, Mary. I needed to accept his call. And, honestly, I was reluctant to do that,” said Dockerty. “John?” was all Arthur could say. Had his voice cracked slightly? “I have pancreatic cancer,” said John. “Dr. Fulani gives me around, oh, two…maybe three months to settle my affairs.


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And then…well…” Except for the uneven sounds of four people catching their breath, the room was completely quiet. The clock tolled a single bell. One pm. ”We have nearly forgotten about lunch,” said John. “And I am famished!” And he walked toward the hallway waving them all to follow him. Arthur stood and walked to John and put his arm over his friend’s shoulder as they turned back toward the room. The two men now stood together alone before the group. Arthur spoke. “You know a few years ago I contracted bronchitis. It lasted for weeks and it was a scary time—I couldn’t get my breath. I felt what it might feel like to die. Instead of giving in or becoming dependent on the pharmaceutical treatments the doctors were pushing I ventured to other ways to heal myself. Oddly, I had met a chiropractor at a conference in Chicago. More strange was that I met him in the hallway. He was actually at a completely different conference. The treatment led to discussions of the influence of food and the healing power of alternative treatments. Something as simple as a massage or yoga adds years to your life if you do it regularly.” He looked at John. “We will look after you too, John. We will find you the best care we can—because we are able to, and because of what you mean to us.” John smiled and tapped Arthur lightly on the shoulder. Thank you. “None of us can overlook health -- it's a very vital part of


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our team,” said Arthur Magnus as his eyes welled with the tears of affection for his friend and longtime business partner. “Supportive, loving family and friends, the laughter, the conversation, the simple enjoyment of a game of golf, tennis, swim, skiing. It makes our lives joyful. And work, especially those of us who have been lucky to discover businesses we love, is so richly satisfying. My lifetime investment holds a far superior value when I appreciate the simplicity and complexity that have been mine to choose,” said Arthur to his friend, his partner, his brother, John.

End of this story… so far.


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Postscript ____

Wealth Beyond Wealth: The Truth about Planning a Wealthy Financial Future Experience Level #5: We easily share what we know aka Conscious Unconscious Competence Every Christmas, someone says to me with attempted humor, “Are you related to George Bailey?” I smile and think, yes, yes I am. Because I “got” the lesson of the Frank Capra film, and resolved a long time ago to live my life with appreciation. The idea of having a “wonderful life” is abstract to too many people in the world today. We’ve gotten a sampling of the possibilities of living it from our story. At last count, based on actual wealth, and not net worth, there are 671,000 millionaires living in the United States. Decamillionaires …Centimillionaires…Billionaires are all increasing in number, too. Are they really different from other Americans? Is there any information or value to be learned from people wealthier than ourselves?


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As the story shows there are ways to manage ones total wealth—and especially ones legacy. Not so important while we are in the midst of our wealth creation, our legacy becomes critical at the end. And as the story shows, we shape our legacy over our lifetime. By deconstructing what wealth is and can do and then advancing, we can see how our investments of our lifetime make a difference. Successful individuals have clear life-purpose. To be sure, money amplifies anyone’s range of choices. Some say riches make the wealthy more sophisticated, more entitled, or more capable. Some say the rich are in a class of their own. Their fortunes are untouchable and unattainable by the average American. This is proven to be false every day. Wealth also has its responsibilities. I am suggesting that wealthy people are just as individualized, their circumstances as varied and subject to choices, time constraints, and processes as the rest of us. Some financial gurus would have you believe the affluent are vastly different. They suggest rich people can be classified, appraised like fine furniture, and maintained accordingly. Others believe luck is the defining factor. Warren Buffett has referred to inheritors of great wealth as members of the lucky sperm club. There are huge distinctions in behavior, the main one being whether people are aware of a purpose larger than themselves. As with anything large, be it a desert, the ocean, or a vast


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amount of knowledge, one needs a reference point to make sense of the expanse. F. Scott Fitzgerald’s short story, The Rich Boy, contains one reference point on wealth. It is one of his most often quoted phrases from “The Rich Boy.” It is often quoted improperly.

Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born very rich, it is difficult to understand.

That is but one view, albeit a popular one. Like the rest of us, “the rich” come in all sorts of shapes. Some are like the striking debutante whose inherited hotel fortune permits her to be the world’s most famous party girl. This is passive wealth; used but not understood, neither is it interesting to the beneficiary. Others are like the frugal and understated millionaire who runs a sound business, looks through newspapers for information (and sales), lives in a modest home, and supports schools, churches and perhaps a political party. There are the high-tech and hedge fund multimillionaires whose passions are as varied as the huge yachts they drive, like Larry Ellison, or those with private personal lives punctuated by the occasional public outcry on public policy, like George Soros. These each represent active wealth. They are more conscious and often very aggressive business people. These are the people who those without money stigmatize as “the problem.”


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Some people like to talk about successful people is that they are "different." This thinking suggests that these people are lucky in some extra way, or that they are blessed, or that they were born with more money. Sometimes this is the case. There is a distinction, however between these people any actively wealthy of our focus. It is my belief that inactive or passive people with money are not as successful as they seem. They are merely rich. Our research focuses on the truly successful people, the actively wealthy. Across business lines and including corporate executives, restaurateurs, owners of traditional and innovative entrepreneurial businesses, very successful people behave differently and tend to make decisions more wisely with a longer view. In down times they tend to know where to begin fresh. In fact, there are important lessons from society's wealthiest citizens, the active investors, those who assemble teams of experts. We've touched on how they do this. Specifically, we considered the behaviors of those who are wealthy and successful in business or in a profession. Across business lines and including corporate executives, restaurateurs, owners of traditional and innovative entrepreneurial businesses, very successful people generally share one thing in common: the financially successful have different behavior toward money than the rest of the world. This "success" behavior comes from a winning psychology or more advanced knowledge about money, say some financial experts. But, it is clear that any American can shift his or her financial situation by mimicking the behavior of the financially successful Americans to also become rich.


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“The Billionaires Little Black Book,” is an instruction manual on the basics of the behavior of financially successful people from the point of view of a wealth advisor. Financial advisory is a relatively new field in American finance, and so it is still being tested for its validity and value. A true wealth advisor is obligated to gain a deep understanding of their client. “The Billionaires Little Black Book,” explains how these and other advisors can positively affect our wealth as they observe, and then serve customers. In turn, they will secure and maintain a financially successful practice. For anyone seeking to grow and protect wealth this book simply provides the “permission” to succeed, offers new tools and perspectives, and the steps helpful in influencing results like those of the truly wealthy. In our survey on gaps between wealth advisors and their customers, we found that advisors are clearer about which professionals are needed, while the affluent and wealthy customers understand investment opportunities outside of regulated markets. We discuss ways the technical strengths of the advisors and the entrepreneurial strengths of the customers can combine to help both parties. The true-team strategy promotes a team style for soliciting views and reaching consensus. The action of seeking consensus however conservative in appearance encourages thoughtful consideration. This illustration will be helpful.


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I attended a Quaker College. The small but financially powerful Christian sect operates meetings by consensus. I can attest to many an agonizing situation where I was involved in student politics working toward agreement on a college wide rule or funding some student activity. It is hard for me to say whether this structure of consensus or the more popular American Democratic structure produces better results. But, I can say with certainty, that the experience of persuading those final executive votes stretched me in creative directions I would not have otherwise been stretched. Consensus may be slower, but the final decision is more certain. Consensus, as frustrating as it can be to the parties involved, brings intrinsic peace and nearly always adds long-term value. While I have not necessarily recommended it in this book, it is instructive to understand how consensus is a powerful alternative to the hastily made recommendations and approval urged by many professional advisers for estates, investment ideas, tax and real estate planning and in some cases employer retirement plans. A few professionals have suggested that bringing together disparate views only confuses clients. What this usually means is that it creates the appearance of a lack of control by the adviser. I ask clients whether they like to have a relationship with their attorney or accountant in advance, or if they just like to see every proposal potentially struck down by someone they don’t know. In fact these ideas protect each player in the process – professional and client.


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Think of it this way. Tennis players play alone in singles or with a partner in doubles. They agree to play by set rules. Both games use a net, a few carefully placed lines, each player’s racquet and a couple of balls. Having a partner and playing another pair of players across the net changes the game. It changes the opportunities. The speed of the game sometimes changes. The importance of height and the angles of each player’s change the shots, literally. So, we can say that singles and doubles matches simply offer different opportunities. The same is true for our mindset versus the “traditional” mindset. Ours is naturally entrepreneurial. Mass affluence expert, Dan Kennedy, describes the entrepreneur’s mindset. Says Kennedy, “when you force yourself to be clear about your objective and how you will get there, you get there faster.” This, he says, is what distinguishes what he calls “renegade millionaires,’ - those who repeat financial success almost at will - from everyone else. What such millionaires possess is an understanding of what is important to get successful results. Unlike some popular get rich quick schemes, there is no clean-cut template for getting rich. It requires behavior that most people are simply unwilling to perform. Entrepreneurs invest their energy on focusing on their work. Unlike practitioners of the Protestant work ethic, which dictates that hard work is its own reward, financially successful Americans know that certain work focused on a strategic goal produces wealth. Actively wealthy individuals tend to have strong beliefs—in themselves, in the projected outcome, and in their ability


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to deliver. Their habits are generally opposed to someone else’s structured work environment. What separates very successful people (and very successful advisors) is an advisor’s ability to understand how individuals view their work and the world. Persistence, unstoppable problem-solving ability, and decisive-ness in enacting their decisions are some of the more important characteristics that separate the rich. But, they can—and I argue must also--be their advisors’ characteristics. This behavior translates into a lifetime guide as well. Quality healthcare presents a good model for examining the behavioral patterns of the wealthiest segment of the population. Withstanding elective medical procedures, the wealthy will, in many cases, pay less in real dollars for healthcare than their less affluent counterparts. Why? On first look, we might assume the opposite is true—that they would be willing to pay more! After all, the wealthy have access to, and the ability to pay for, the best quality medical care and health insurance available. They also know how to locate it and go to it. And they are not limited by geography or politics. This also applies to our advisors. If they consistently fail to meet the customer expectations, the customer will move on. Unlike the rest of the world, the actively successful make thoughtful decisions. They explore moneymaking opportunities in detail, with an eye to saving money in the process. Wealth planners who merely sell investment products cannot produce the results clients seek. Many financial products are formulaic, and though that might work for the


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average American, this does not necessarily meet the needs of the very wealthy. In our survey, wealthy people felt “these people are doing business the best they can.” Some advisors are rash and un-prepared with their recommendations. Some wealthy people excel at creating their own investment opportunities, looking into the details, working with persistence to find solutions, and maximizing their investments. An informed client will pummel the best advisor with questions, and take as much time as they need to make informed decisions. I advocate making decisions over relying on the “time-saving” habit of providing approvals. Why? Because decisions are active, approvals easily become passive and thoughtless. “The Billionaires Little Black Book” is a pathfinder of wealth advice and processes that complement the client’s wealth goals with life. By taking a long view and working collaboratively with carefully selected professionals from a variety of disciplines, the client becomes the focal person in helping clients achieve their goals. Money buys the luxury of not needing to worry. And money buys choice. Trusted advisors understand that fruitful relation-ships take time, they're challenging, and that the rewards are significant. By adopting an interdisciplinary, collaborative decision-making style, successful individuals and their advisors solicit views and reach consensus that are more likely to bring the desired result. The action of seeking consensus is conservative, and it encourages thoughtful discussion that affluent customers expect. One of the biggest differences is the way the client and the advisor invest their energy. Many clients have learned that


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focused, hard work will produce wealth. The more popular Protestant work ethic is that hard work is its own reward. This is a minuscule piece of the active wealth concept. Many believe that very wealthy people have a projected outcome always in mind and the confidence, if not always the ability, to obtain it. The view of very wealthy people sometimes opposes the structured work environments that most of Americans perform today. In short, work, and not money, separates the actively wealthy from everyone else. In Titan, Ron Chernow’s biography of John D. Rockefeller, the author provides us one classic view of work. It is appropriate to remember because, happily, it is still alive and living in the U.S. In his youth, writes Chernow, Rockefeller spent the better part of several months looking for his first job. He had attended a trade school where he had become proficient in bookkeeping and was finally able to land a job in Pittsburgh. It was a turning point in his life. He referred to this incident throughout his life as “Job Day.” His skill in accounting became the cornerstone for everything he did. How he thought. How he devised his decisions. What he saw in the numbers created a metric for innovations—such as transporting oil in height lines rather than in wood barrels, and breaking oil into component products such as light machinery oil and the heavier asphalt— that made him the richest man in the world. How many people today can claim such visionary skill for building real economic value? And how many would work as hard as Rockefeller did in building, and then again in distributing, one of the biggest fortunes ever created? You can count them on one hand.


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This behavior is very important for any financial adviser who wants to gain and retain such a wonderful client and do so for a long time. Let's begin with how actively wealthy people got where they are and how informed financial and other advisers will help themselves and others get there, too. My hope is that you will be making decisions for your future by using this collaborative system. You have been introduced to the concept of creating a trusted advisory. Be curious. Get different professionals working in tandem to develop and maintain your cohesive and complementary financial and life plan. If we are managing our investment of our lifetime well, I believe it will be hard to tell our objectives apart from the journey. Doesn’t that sound like a wonderful adventure?


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Book 2 The Billionaires Little Black Book


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Part I:

Create an Information-Sharing Wealth Advisory Team Develop Strong Core Objectives To Attract the Best Advisors


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I often ask professional advisors why they choose to hunt customers when they can fish for them. There is a myth that rainmakers are all very aggressive and tough. I am sure they can be. But I do not believe they are generally pushy. I believe they can be very smooth. And I believe their specialization “story” about why they are advisors and not their physical being is what attracts most investors to them. Here are the steps true wealth managers take. Thomas Stanley’s research confirms that wealthy individuals enjoy a distinctive position in the marketplace of financial opportunities. So their advisors tend to follow these steps.

• Develop a strong sense of the client’s business

• Learn all they can about the client’s business(es)

• Dig into the regional and local specifics, conditions and variations

• Develop personal relationships with other

professionals working in those areas.

• Start helping clients, often before they're formally hired

• Go back to Step 3 -- to do more research.

• Write. An article, a book, letters, a speech, a

website. Clarify how you differ, how you help people, your passion and your experience doing so.

• Create advisory teams for their business


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• Check in on Step 1. Revise and repeat, if necessary. You'll take similar steps to measure your actions. You'll determine what gives you the most useful information. Some of these steps will be very straightforward. Simple measurements include such things as determining how many think tank meetings are required (and at what cost) to achieve increases in your income or enhanced protection. Consider the value (or cost) of the long-term relationship. It'll pay to take time to do the math. The potential benefits you get from your advisory team should pay for that team many times over. Why? Because, you'll have structures, investments, additional opportunities and protections. That’s a better picture, isn’t it? Here are the steps for metrics that you will want to consider.

Assess Your Advisor Prospects

Ask about the following areas:

Typical Customer Fees Annual fees on assets Special studies Filing fees Maintenance, advertising and “other” fees (monthly or annual)

What do you do differently from others in your industry? Accounting system Customer service


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Employee benefits and distinctions Special programs

Consider the advisor’s lifestyle:

What do you and your advisors have in common? What do their kids do? What schools do they attend? Do they have a personal passion for their work? What sports, culture, leisure, and get-aways do they enjoy? Where do they live? How do they live?

Knowing more about your advisor will help you to establish a sound working foundation. Knowing the advisor helps promote confidence and trust, as well as awareness. This approach will also distinguish you from their other clients. It will very likely provide you valuable information you can use to manage your other advisors. A recent Harris poll says only 17% of Americans have favorable views of their financial advisors. That's pretty poor. Don't you agree? Well it's not necessary. We want to locate the great ones. By now you should begin to be seeing a better way to work with professionals. The question is whether you are ready to be different?

The Secret of Adding Value

Begin by thinking “team” The act of creating a team forces truth. No one is an expert in everything. The team concept makes each member highly responsible and accountable. You are caring for your team and encouraging them to


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make better decisions. Naturally, you are also the team leader. Consider which services should and should not be outsourced. Refine your understanding of your advisor’s needs and expectations. By locating supporting vendors and accountable, reliable, courteous (ARC) professionals, your results will be better, and your costs will be contained. Inspire and collect stories and situational anecdotes that illustrate real-world solutions. Advisors have a reputation for dry, witless patter. It is a shame, because there are some important lessons to be shared. A story has the advantage of being memorable to draw upon later—you may want it is an example. Seek out other professionals working with clients like you. Seek to constantly improve your advisor’s service. The more qualified people you meet the more qualified and powerful people you will continue to meet. The good advisor will see your efforts as an opportunity rather than a threat. All this brings us to how you are going to locate and work with the very best successful, rounded professionals around.


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Part II:

Set the Example

The Seven Methods for Hiring Successful Professionals and Create and Develop Your Billionaire Team


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7 Strategies for Finding the Elite Top 2% Professionals For Your Billionaire

Team

1. Hire an attorney to write your will and to discuss your state’s law and rules on probate. Once you are a client, it is not unreasonable for you to discuss referrals to other professionals. Thomas Stanley writes that affluent people turn first to their attorneys and CPAs for investing advice. He explains that affluent people tend to have worked to build value, which creates capital. Truly affluent people want to first know the tax ramifications and the legality of their investment.

Attorneys and accountants are not trained to be problem-solvers, neither are they trained to be good business people. And few of them understand that your success is a powerful marketing tool for their business. But they can help in an important way. They can help keep you out of jail.

Find an attorney you can actually reach and talk with first by phone, then in person. A useful attorney will be diligent and will bring you useful ideas. You can usually tell when an attorney is ethical, intelligent and diligent in running his or her own business. Just look around. Civility and courtesy are traits that I look


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for, especially with staff. I do not want an arrogant attorney, but I do want an attorney who can hold his own against someone else's. I also want an attorney who works well with other professionals because the attorney does not know everything. Your capabilities in carefully selecting a good attorney can be the cornerstone of your and your family’s future.

2. Questions. In my business, I work to help

clients change their manner of responding to questions. I intend to help them see things differently. In a non-adversarial conversation that challenges us, we tend to stretch our minds. We tend to move away from learned behavior that may be holding us back from recognizing new opportunities.

Remember when you're interviewing a professional; you're not responsible for the answers. Fight the natural tendency to fill in answers for your professional. They should be providing solutions that you haven't already seen. After all, if you're going to provide the answers, why do you need to professional? When I worked on television I met a psychic, who happened also to be a hypnotist. He produced some stirring results in those whom he was able to hypnotize. I was not one of them. I have


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never been able to be hypnotized. (This doesn’t appear to keep me from hypnotizing others.) As I watched the man work, a few things became evident. By looking very closely at the person, by asking very subtle questions and by drawing from his great intelligence he was able to deduce likely birthplaces, parental and sibling situations, and other things any of us might regard as personal. The lesson was this. If he had been truly psychic he wouldn't have needed that other information. He was using his subject’s information. The subjects merely allowed themselves to be impressed. A businessperson who really wants to know the expertise of a professional won't help the professional manage his needs. Rather, a good professional should be able both to respond to good questions, and have a series of good questions for you the client prospect. An interview with a professional that turns into a sales talk gives you everything you need to know about that professional. A sales talk should demonstrate to you that your search for a professional in this area is just beginning. Use as much time as it takes to create your team.

3. Many practicing professionals write.

Account-ants, lawyers, CPAs, investment


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advisors, even doctors, are likely to have written papers or articles for professional associations or community magazines.

The savviest professionals tend to be good marketers. A proven way to market a professional practice is to demonstrate one’s knowledge. Capability often follows. The professional who writes articles and books can be checked out. An extensive paper trail clarifies a person's thinking, but it also provides insights into how a professional works. You can also share the professional’s article and ask for a review and comments from someone else on your team. You're not hiring a writer though. Their words on paper are merely a mark of their diligence, confidence and competence. On the other hand, hiring a professional who can think, write, and execute a cogent thought is almost certain to help you.

4. Use the team concept and build the team

as you go along. Many professionals link up with other professionals. It is not unusual to meet professionals who have worked together in the past. Sometimes they have a regular working relationship. You need to be careful, but sometimes you can become the beneficiary of these existing relationships.


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Many professionals like to work in collaboration early on and they may be interested in doing so with you and your business. Explore the possibilities carefully. Think twice before involving professionals you do not know, or do not have solid references for, regarding their day-to-day operations.

One way to check a professional’s usefulness to you is to examine your mutual "idea chemistry." This is difficult and relies on certain gut capabilities. What happens when you offer a suggestion? Is the professional negative, or interested?

The professional can either help you to learn to manage your affairs while providing you with excellent service, or they can behave in a shortsighted manner by dismissing your questions and ideas as trivial. If that is his case, simply say, “No, thank you.” Remember it’s your life, your money, and your concerns that are to be the focus of the conversations.

5. Work with people you already know.

Networking with friends who are professional and business associates you know is a very good way to begin. You begin by doing what most people won’t do -- ask questions.

If you're fortunate, you live in an area with a strong Chamber of Commerce, strong


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associations, or a business network. Use them. One benefit of working within an Association is that while they have no direct benefit in helping you, they have everything to lose by hurting you. Many local organizations are aware of their importance and influence. If your business will help your local region you will generally discover they sometimes offer abundant help and support.

6. Develop a workflow plan for your

business; and ask for feedback. You may find others have experience that will help you. Increasingly professionals discover that despite a lack of direct personal experience, other professionals may have garnered knowledge that is very useful.

Moreover, in your spadework and discovery, you may chance upon an interesting idea presented to you by a professional. If it has merit for your business -- pursue it. Building a successful business is an art, not a science. “Kaizen,” is a Japanese word meaning constant improvement. In my experience one does not have constant improvement without a nearly constant input of new ideas and revision. Business people do not become discouraged by delays and denials. What makes business people successful is through consistent effort and hard work. Professionals are no different


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from anyone else in that they are human. Be smart, and separate their personal weaknesses and failings from their profession. If you are not happy with the professional you locate, move on and find someone using your newfound skill and discernment.

7. Remember, when hiring a professional,

you are hiring a skilled employee. You have a right to be choosy. You also have a right to set standards and expectations.

It is entirely possible that you will find that some professionals have expectations for you as well. These would include processes that show you how they work, what you can expect from them, and their administrative areas of billing, reporting, and sharing information. Examine these with the professional because they can be very useful to you, saving you time and money. There are those professionals who are poor at creating structures and you’ll find it helpful to recognize a lack of helpful systems—up front.

Remain watchful and remember that you're merely hiring someone with greater expertise than you possess in one area be it law, finance, accounting, or medicine. The professional may or may not be a good administrator. That weakness will cost you


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time and create aggravation for you in the future—sometimes more than the cost of the services you desire. Resist paying the “time and money” kind of excess fee you may encounter with a disorganized professional. These fees are simply not acceptable.

Summary:

No one will ever know your objectives, your values, your hopes and dreams more clearly than you. No doctor will feel your pain. No lawyer will suffer your wrongs. No accountant will take, nor manage, harassing calls on your behalf. You must prepare yourself for the downside of poor choices and missed opportunities. Doing otherwise might mean a longer work life for you, higher taxes, evasive financial freedom, slow healing or repetitive doctor visits. But, preferably, you will now prepare yourself to win. If any professional is not helping you in the way that you need, in the way that you desire from the beginning, fire him and move on.

Other tips:

! Create milestones for your professional relationships. Discuss them with the advisor.


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! Give the relationship a trial-period of at six to 18 months.

! Be prepared for meetings. Research. Draft questions—even on simple concepts and “basic” terms.

! Allow yourself sufficient time to locate good advisors.

How to Create a Billionaire Team: “Lead Quest”

There are broad changes ahead for protecting and managing wealth. First of all, the amount of money changing hands is the biggest in history. It is at least twenty-six trillion (that’s with a “T”) and it may be as much as one hundred trillion. Current projections and advertising are based on varying degrees of accurate information (and the courage to change direction). Sixty-five (65%) percent of all net worth is controlled by people over 50. Seventy-five (75%) of all pharmaceutical sales are to people over 50 years old. Women make eighty percent (80%) of our household spending and healthcare decisions.

Live by Example: Encourage your beneficiaries toward developing and managing their own billionaire team.


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Great questions are

simple and can garner

important information. Imagine

the knowledge gained

from these short questions.

"How many languages do your children

speak?"

"When was the last

time someone said to

you, "You know,

you've got a powerful style!"

"What is the fastest way to your heart?"

Interesting questions,

eh?

None of this is static. All these numbers are likely to increase. On the other side of the equation are the professionals. Popular management wisdom says that the top five percent make up the can-do portion of an average company. These are the self-motivated, self-start-ers who need little help, training, or support. The remainder, according to this generally accepted wisdom, is the reason for middle management. In the financial advisory industry, we refer to it as the trusted advisory segment; the figure is more like 2%. That’s right; about two percent know what they are doing, what their customers need. And they are committed to constant improvement in that work. We interpret this to mean continuous wealth


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generation for them AND their customers. They do it through simplified management of complex teams. Why teams? One person simply cannot obtain sufficient information to create, plan, and maintain any financial decision of con-sequence without substantially educating their customers. A few organizations are talking about using teams. But, it is usually just the inclusion of an insurance agent with a banker and a broker. The really “radical” ones have a lawyer. That’s an unbalanced professional team in our view. It is grossly inadequate to truly add value where the customer wants to enhance and protect assets. The same steps we recommend for the customer should also be used to protect the professionals from errors and omissions, and sometimes more extensive liability. The days of the lone gun are pretty much over. And considering that it only takes a few weeks to create a well-honed Billionaire Team—we feel it’s worth your effort. As we’ve said, few professionals have the capacity to act at peak levels required to lead a Billionaire team. Here’s a quick quiz. How long do you think you would have lasted on “The Apprentice”? Your honest response is an indication of where you are right now. This doesn’t mean you cannot radically alter your position and move quickly up the ranks of top advisor.


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Not at all. Just pay attention to developing teams along the Billionaire model. It demands constant learning about new ways to attract and keep strong relationships with imaginative and trust-worthy professionals. Real professionals are constantly helping our customers and clients locate new approaches and processes to help them and their customers. The best part is that along the way, we have the opportunity to choose which people to work with and not work with for a whole lot of different reasons. They may not return our calls. They may make scheduling a simple meeting difficult. They may act overconfident in ways that aren’t acceptable to us. They may have reputations that do not compliment our business. I’m going to share a series of questions that open and maintain conversation about the other person’s business. You’ll notice that most of these questions are about basic things. The reason for that is that we first need to “draw a bead” on the other professionals real skills. Whatever they do is just the grease that makes things possible. You protect and enhance your own wealth by knowing how they can operate on your behalf. A really great question will cause a person to stop and think. Sometimes we ask questions and people respond without much thought. What


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kind of music do you like? Where do you live? These are questions that have throwaway, pre-scripted answers and they aren’t great conversation starters. I’m also going to reveal the secrets of asking a power question. These questions can be crafted in such a way that provides information useful to wealth advisors. Knowing how to question is an important art that is often overlooked. It can be a very powerful tool and provide one with important information. Salesmen forget this. Executives forget this. Statesmen and politicians forget this. Learning to question and having the ability to listen will place you heads and shoulders above your competition. What keeps us from asking questions? We take it for granted that the “other” party knows, or we are sometimes embarrassed or reluctant to ask questions of professionals because we don't want to appear unknowledgeable. I want you to know you have a right to question your professionals. Be pushy here. A good professional welcomes your interest. Our lazy ways can kill big opportunities. Don Miguel Ruiz in his book “The Four Agreements” describes the appropriate awareness this way:

If others tell us something, we make assumptions, and if they don't tell us something we make assumptions to fulfill our


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Rethink your own motivation. Ask yourself…and be honest as the day is long…

“Am I more focused on winning, or not losing?”

need to know and to replace the need to communicate. Even if we hear something we don't understand, we make assumptions about what it means and then believe the assumptions. We make all sorts of assumptions because we don't have the courage to ask questions.

Remember that the manner in which one responds can divulge the true meaning of one’s thinking. When asking questions what you need most is confidence. Not simply for yourself, but in order to help you to impart that knowledge to your customers. Deliberate questions produce useful information. Wealth advisors use such information carefully. It helps determine whether you can provide help for this business and/or whether there is a relationship to develop.


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My goal is to get you to create questions that get measurable and objective answers. Jacques Werth, author of "High Probability Selling," goes even further. When we meet someone new, says Werth, we tend to want to make a good impression, and it is a social stand. It is culturally rooted in the United States that we answer every question politely. It would be too abrupt and break the flow of the social context. So leverage it. Says Werth, "The first time I meet someone I can ask them anything." Human nature and our culture train most of us to respond in kind. Or suffer feelings of guilt unless we respond to a polite request. Great questions perform numerous tasks: 1. To elicit information. You need to collect some basic data, contact information, assets, experience, any information required by law. A first interview, however, should also be your time to decide if you want this customer. 2. To verify information. Especially in referral situations, information needs to be verified. 3. To share and encourage open discussion. Due to the lack of financial confidence in the average American, it is not unusual for a prospect to bring a goal or problem with an idea already in their mind about how to solve it. I cannot tell you the number of times I've seen financial advisors save people from going down “Wrong Solution Road”


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because the advisor had done their homework. 4. To permit “appreciative inquiry.” Appreciative inquiry is a concept from executive coaching. Think of this is as acting like a counselor. Your questions help the other person think through situations, removing the emotion and replacing it with logic and order. Sit and listen for a period of time, encouraging the other side to go deeper, without judgment or decision on your part. Here's a list of questions that we recommend for professionals working with other professionals. Sometimes I use it as a guideline for the types of questions that need to be asked. Many of these can, and should be asked, right up front in conversation. Here are the baseline questions for professionals. There’s more included here, too, toward the back of this book. But, these will give you a useful set of standard operating questions. I call them the “Mighty Twelve.” They are the ones people are least likely to ask and most likely to need. I’ll use wealth advisors in my examples.

The Mighty Twelve Questions for Professionals

1) Have you ever been sued or been a party

in a lawsuit professionally or personally? This question is too often overlooked, or it comes up later in the process than it should.


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2) What is your professional discipline?

Wealth advisors, for example, are not just stockbrokers. With recent changes in the law many of them sell insurance, banking/credit services and brokerage. In fact, they usually have some added expertise, motivation, or philosophy that will be part of this description of their discipline. Personally, I prefer people who are passionate about their work.

3) What percentage of your time and in what areas do you keep current? You’re looking for the extra-curricular here. Many advisors go to their firms’ training, or golf outings that are ostensibly workshops. Find people that go the extra mile, and who work to learn.

4) What percentage of your recom-mendations do you personally invest in (would you invest in if you met compliance restrictions)? This is pretty self-explanatory. Do you ever wonder if this professional is investing in his or her own ideas and recommendations? If you discover there are other investments they're investing in which they haven't shared with you--why aren’t they sharing their best ideas and opportunities? Less than 5% of advisors price their advice and invest themselves in their own recommendations.


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5) What is the average growth of your clients’ accounts? Don't let measurement scare you, in fact, measure anything that gives you a meaningful benchmark. What can be measured can be improved.

6) What is the average period of time your clients stay with you? Turnover occurs in every industry. You're not trying to entrap someone here, rather look to see what a professional thinks about his or her clients and about their practice. If they have a skewed view of the industry, their practice, or clients in general, it can come out here.

7) Of your total client base, what percentage of it is concentrated on assets in excess of (your net asset range)? The truth serum is in the eye contact. You need to know how far along this person is in his or her wealth advisory career and if they are expert working with situations like yours.

8) How are you paid? This is a factual question that gives you insight into how the adviser works, whether they're good marketers, and whether they're organized. Please, strive to not take anything for granted.

9) What kind of dollars for fees would I need to allocate for what we've discussed today? Ditto, from above.


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10) How did you get to that figure? Follow-up questions, like this one, check for consistency.

11) How will we develop and build our strategies? Lots of people have good ideas and products, very few have processes. This course is about being pro-active! Seek out wealth professionals with adaptable processes. That is how you will make the most money.

12) What do we do if this goes sour? The

reality check question. There are legal and accounting issues to be sure. This question has more to do with working philosophy and whether this prospect is thinking about solutions -- constantly.

There they are. The “Mighty Twelve.” But we're not done. People tend to seek agreement; it’s how most of us operate. We don’t want to behave in a confrontational manner. In reality, much of business should be more focused on skillfully eliminating under-qualified people. There’s more to this than meets the eye. There’s an old story about Ted Turner. In his heyday, before he was marketing buffalo meat and quietly building major websites from his Wyoming base of operations, he attended many parties. He always left by 10:00 pm.; this was his rule. He was sociable (somewhat, if you


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“Experience teaches only

the teachable.”

Aldus

Huxley

remember the “mouth-of-the-south” you know about this) but he was first and foremost focused on his business. Obviously it paid off for him, up to the Time-Warner acquisition of AOL, anyway. As wealth advisors, we are always seeking profit-enhancing information. You will achieve that in the creation of long-term thinking and your billionaire teams. Like Trump in “The Apprentice,” when you hire you are observing how cooperative or uncooperative and creative people are by nature. Troublesome people are ill matched, or unqualified people may need to be fired. Let’s move to processes and character questions for Billionaire Team members. Documenting Operating Character: Questions for Clients and Advisers Put a checkmark beside questions that you’d like to ask.

" What have you recently purchased—either a product or service-- that you think is really a good value?

" What product or service have you recently purchased for


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your office or business, that you believe will help your customers or earn you more money?

" What is your single most critical business challenge today?

" Do you "walk on egg shells" around anyone and watch everything that you say because they have a hair trigger temper?

" Does this person behave in a condescending or superior manner towards you? Do they treat you as if you're incompetent?

" Is this person hypercritical? Do they blame everyone else for what goes wrong?

" Does this someone around you have a Jekyll and Hyde personality? Is this person charming in public and cruel in private?

" Does this person use aggressive body

language, inappropriate comments or touching, or physical intimidation with you?

" Does this person dominate conversations

and talk over people who try to get a word in edgewise?


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" Does this person insist on controlling the decisions (for example choice, timing, approach) and attack if you dare question their judgment or authority?

" Has this person tried to isolate your from

friends or family? Are they resentful when you spend time with others?

" Does this person challenge or criticize you

in public because they know you won't cause a scene?

" If you threaten to end the relationship,

does this person change her behavior to reel you back in, only to resume her unacceptable behavior?

" If you object to this person's behavior, does

he go on the offensive and demand to know why you are giving thim such a hard time?

" Does this person indulge in erratic

behavior, such as breaking commitments, reversing statements, or twisting things around and then accusing you of overreacting?

" Are you happier when you're not around

this person?

Questions for the “Inside Professional”

" What do you love about your field?


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“Plans are useless,

planning is absolutely

essential.”

Dwight D. Eisenhower

" What do you love about your practice/business?

" How did you become an advisor?

" How has your practice changed?

" Do you see opportunities differently now?

" What do you believe is the most important job of a ---- ?

" How important do you believe additional professional designations are?

" When would you “fire” a customer?

" Under what circumstances should the customer fire an advisor?

" Let’s say something bad occurs over which you have some, but not complete, control—what would you do?

" How often do you review your customers’

accounts for balance, the impact of the current strategy and any changes in the markets, or changes in the customer’s needs?


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" What is your process for introducing

customers to your practice and how you work?

" What is your specialty?

" What do you enjoy most in your work?

" Who would you say is your best customer?

" What do you believe is the role of

promotion and advertising in your industry?

A wealth advisor friend of mine, whose clients have average personal net worth of over $20 million, provides some additional advice. This advice is for professionals, but it applies to us all. When you're in a selling type of situation, a negotiation or any discussion around money -- ask questions regularly. Don’t worry about using the same questions. You deserve to know what's going on. You have a right to know what's going on. Here are questions around the Robert Kiyosaki’s six areas of attention for building unlimited wealth. You can see how well my questions above match his. Understanding this is extremely useful to you in ways I’ll describe further on. Focusing on these will lead you directly to great wealth.


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Robert Kiyosaki’s Wealth Attentions

! Income.

! Expenses.

! The value of your assets.

! Liabilities.

! Financial education and management skills.

! Insurance. Businesspeople relate easily to the following stages of a new Business process. Introduction, customer intake, due diligence, first business meeting, follow-up, a projections meeting, update meetings, new business, and referrals are all part of this process. The typical advisor’s intake conversation is weak. They tend to cover the most cursory information before they push papers and pen across their desk. That’s ineffective and even offensive for a successful individual or the head of a wealthy family. Using the following questions you will enhance your personal power and locate the best advisors. Remember that you'll be separating yourself from the typical client. Instead, you will be gathering


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useful information from your advisor prospects. You will begin by carefully teaching them about your needs. By constantly being ahead of your advisors you’ll be getting world-class service for life. When you exercise our wealth team model to discuss investments, issues and solutions, you will experience a shift in mood and results. This will challenge you to seek out the best advice, and your ability to make better, longer-lasting, fully considered and profitable decisions will be vastly enhanced. THE KEYS TO CREATING BILLIONAIRE WEALTH TEAMS Here are some good questions for attracting top-notch team members. These questions are extremely powerful. Don't be alarmed by the simplicity of these questions. Please notice how they concentrate on getting information on one item at a time. Asking a broad and unspecific question allows the other person to equivocate and avoid a direct answer. Don't lose focus, concentrate on what you need to know. Here is your New Investment FOCUS anytime you

invest your TIME or your MONEY FOCUS is easily remembered. As a tool it anchors goals and team objectives. It stands for—


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“It has been my observation

that most people

get ahead during

the time that others waste.”

Henry Ford

Forward Thinking

On Target

Clear Purpose

Useful Processes

Sincere Attitude

“Focus Questions” based on these concepts are also powerful thinking and planning tools. Imagine, for example, specific situations where you can use the questions below. The core FOCUS questions and the interview questions overlap in creating your powerful trusted advisor team. By the way, these same questions are easily adapted for any situation where you want to use True-Team Strategy.


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General Focus Questions

" How would you rate your overall business communications skills, and how is that reflected in your business growth?

" Do other people and organizations trust you and your organization?

" How do you know?

" How can you increase and strengthen that trust?

" Are you reaching out to new people and organizations?

" Do you approach networking as an opportu-nity to launch your "brand," or to strengthen a connection with others?

" Do you support and stay connected with your alumni, and/or other contacts with other businesses and communities?

" What information are you sharing with the world? Are there other kinds of information that you could share?

" Do your website and other communication methods attract others?

" Can anyone looking at your information figure out who you are?


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" Who are the leaders in your organization that matter most?

" Do your materials (your web-site, brochures, plans, proposals, and reports) use words that people understand, and language that conveys to others that you are knowledgeable?

" Do you consider questions from outsiders as irrelevant and that you feel beholden to respond to, or are they the beginning of a meaningful conversation?

" What is your process for handling them?

" Do you ever introduce people that you feel will be compatible with each other?

" Do your introductions include putting organizations with potential prospects? And vice versa?

" What are you expecting in return for these introductions?

" Do your staff and partners ever talk to one another about new endeavors without your prompting?

" Can you help your staff start their own conversations, have their own meetings, and develop strategies that support your efforts


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“Going to work for a

large company is

like getting on a

train.

Are you going sixty

miles an hour or is

the train going sixty

miles an hour and

you're just sitting

still?”

JP Getty

and objectives?

" Do you celebrate achievements by other players in your business?

" Do all your staff, board members, clients, vendors, participate in your businesses-plan making process?

Going the Extra Mile

" What's important about this?

" Where is your energy

around this?

" What matters to you about this?

" What's the meaning of this for you?

" In what way are you attached to this?

" How does this work for you?

" How does this relate to x? [Work, this situation, etc]


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" What do you hope for, dream for, aspire to?

" Let’s say there was one thing that would make a difference, what is it?

" What really matters?

" What's required?

" What's needed?

" What's missing?

" What do you need to move forward?

" What would have to happen for things to change?

" What are your beliefs about that?

" What would you have to believe?

" What do you have to let go of?

" If you only had 6 months to live… what would change?

" If you had all the money you ever needed… what would change?

" What if you didn't follow through/commit to this/ complete this?


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" What's your motivation?

" What's the opposite of [this occurring]?

" How have you embraced this in your life?

" Is that a goal of yours?

" What do you [feel, think] about that?

" If you had 2% more courage, what would you be doing differently?

" What is causing this not to occur right now?

" What are you using as a basis to choose?

" What are your beliefs [around this issue, this decision]?

" What are you going to do?

" What's the first thing that pops up?

" Which is the most important?

" What's the ideal?

" What choices do you have?

" What benefits will be desired?


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" What is motivating your action in this situation?

" Why is this, a dilemma for you now?

" What about this situation is difficult?

" What do you want to do?

" What don't you want to have happen?

" What is your heart telling you?

" What is your greatest fear?

" What needs immediate attention?

" What would help you most right now?

" Why do you think that's so?

" What do you most need right now?

" If you had a choice what would you do?

" What's frustrating about this?

" What would give you the most joy?

" What is your biggest obstacle?

" How can you remove these barriers?


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" What do you want to focus on in this brief moment?

" What's important right now?

" What would the answer be to this situation?

" Why is this important now?

" What would success look like in this situation?

" What do you think success would be like in this situation?

" What prevents you from being successful?

" What do you want to happen?

" If you could change one thing that would impact this situation right now, what would it be?

" Where are you getting stuck?

" What belief is getting in the way of you moving forward in this situation?

" What belief do you need to release to help you move forward?

" How else could you look at this situation?


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" Is what you are saying about this situation a fact or interpretation?

" What is your intention?

" What inspires you to want to solve this situation?

" What needs to happen for this to work for you?

" Who do you want to be in this situation?

" How can you apply resources to make the biggest difference?

" What needs to change to have a successful outcome?

" What kind of outcome is needed?

" What was the strategy behind your actions?

" What assessments did you make about the situation?

" How do you have to be different, think differently and or act differently?

" What can you create?

" What leads you to that conclusion?


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" What one goal would you focus on?

" What is your vision?

" What is your purpose?

" What really matters to you?

" What is missing that would make a difference?

" If you were helping someone else with this situation, what question would you ask?

" What conditions will create a change?

" What is the most simple and logical thing to do?

" What does your intuition tell you to do?

" How does this need to change?

" What would create high leverage?

" Where are the high leveraging areas?

" What are the easy things we could do to get started and build some momentum?

" What is difficult about this?

" What inconsistencies do you see?


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“What’s great about being a Rockefeller is you grow up knowing you have a chance and obligation to do well and try to make other people’s lives better than they are.” --Sen. Jay Rockefeller

" What issue is important to you that will have the most impact today?

" What are the outcomes of your actions?

" What are the consequences of not taking

action?

" If you could get help with only one more thing for the rest of your life, what would that be?

" If you had only 24 hours to live and could fix one mistake you have made in your life, what would that be?

" What do you want to accomplish?

" What do you want to be?

" What's on your mind today?

" What's important about that?

" What's underneath that?

" What is one thing you could do that would help you with this issue?


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" What do you want to change?

" How important is change?

" What do you want to do now to ignite change?

" Where do you want to go after the change occurred?

" How would you like me to support you during this journey?

" What's important to you?

" What are your guiding principles?

" What is your passion?

" What makes you want to get up out of bed in the morning?

" What is your purpose/mission?

" What keeps you up at night?

" What drives you crazy?

" What is important to you?

" What do you mean?


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" Can you say more?

" What would you like it to be?

" What example can you give me?


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Part III:

Billionaire Teams and Your Business Finding Your Way Through the Professions


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The High Achievement Six Pack

Questions For you… and your family

# Do you have a strategy for making

money?

# Do you have sufficient reliable

sources for trusted information?

# Do you have sufficient reliable

people or groups to go over your

ideas and reconstruct them?

# Over what period of time are you

committed to making your

anticipated level of profit?

# Who and what are your secondary

strategies, information sources and

support groups?

# What don't you know now that

could stand in the way of your

making profit?

These focus questions are modeled on top executive-coaching questions. They are powerful to ask of yourself and energizing when you ask them of your customers. Pin this to your wall and achieve your monetary goals!


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Direct Tailored-To-Profession FOCUS Questions Questions for Professionals Seeking an Outside Financial Advisor or Sub-Advisor Wealth advisers are often representing their clients and customers in negotiations and complex matters. The lifetime of their firm and the products they recommend are important. If they are selling insurance, they must accurately record and report customer’s payments. Low premium "come-on" prices must be questioned. Policies should not be frequently replaced, and neither should health reports be fudged in order to get the policy approved-- claims may not be legitimately refused. The client should not be pressured to hurry up, and neither should affordability or usability be glossed over. The point is this. Learn from how the family office works—glean their strategies. Forward Thinking

Who is your typical client? Do you have an area of specialization? Do you give advice only, or do you execute the transactions? Describe the worst client you have ever had.


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How long will you expect me to hold a given investment? Why? Can I get out of investments quickly and without high cost? What are the danger signs that the relationship is not working? What happens to me if you change firms? How do I complain or seek restitution if there is a problem? On Target How many active clients will you work with at a time? Reversing the roles, a minute; as a client, why do you want to hire me? What kinds of people do you not want as clients? Will you take possession of, or have access to, my assets? Do you have the discretion to modify my investments without my approval? How much commission will you and your firm earn on my transactions? What is your rationale for picking a specific product? After all fees are paid, will you discuss with me how much an investment must gain in value before I break even?


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“…Smile when you read a headline that says ‘Investors lose as market falls.’ Edit it in your mind to ‘Disinvestors lose as market falls—but investors gain.’” Warren Buffett

Clear Purpose What service will I get? How often will I hear from you, and what will prompt your calls? What is your investment philosophy? Have you ever had complaints filed against you by customers? How were or how would-be complaints against you resolved? How do I know if your recommendation suits my needs and risk tolerances? Will this sale help you win any prizes or sales contests? Useful Processes

What certifications, if any, do you have? Can I have a copy of your Form ADV (SEC registration) both part one and two? How (and how much) do you get paid? What criteria do you use before deciding what to buy?


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Under what conditions do you sell? Can I review sample plans and statements? Can I get the names of a few clients to provide me with references? Will anyone else be working with me? Do you personally research the products you recommend? How will we resolve complaints, if I am dissatisfied? How do I terminate this relationship, if we do not reconcile my concerns? What standard do we set for performance; and how do we monitor progress? Sincere Attitude

What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you become a financial advisor? What is your definition of "wealth?"


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EXTRA: Why People Don’t Ask Good Questions

Our surveys and interviews suggest that there are a number of reasons why people fail to engage professionals with tough questions. Here are the top reasons.

1. The client doesn’t want to appear stupid. 2. The client doesn’t want to ask the “wrong”

question.

3. The client doesn’t know what questions to ask.

4. The client is intimidated by the professional trappings.

5. The client is intimidated by the “professional”

attitude, speaking style, or advisors mannerisms.

6. The client resists feeling off balance; she may feel uncertain. Am I about to have the burden of making important decisions removed, or lose my privacy while making the biggest mistake of my life?

If you have ever engaged a professional, it is likely that you experienced one or more of these feelings. (If you are a billionaire already, good chance you learned how to handle those feelings.) If you aren’t a billionaire, or if you are a billionaire and a great student you will want to go over the following questions.


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I always remember as a kid watching Star Trek. This sci-fi TV show sent a crew of the Starship USS Enterprise into strange and wonderful galactic adventures. Where the crew would meet up with especially dangerous and difficult individuals they would improvise solutions. One of these was to call on Mr. Spock, the #2 after Captain Kirk. Spock was a Vulcan endowed with powers beyond any humans. One of these was the Vulcan mind meld. Spock would grasp the offender’s shoulder blade and gently neutralize the person by making him unconscious. I have included a few neutralizing questions to us on professionals in several fields. Use them like Spock’s mind meld, as appropriate. There are questions for the following

• Lawyers • Psychologists • Physical Therapists • Accountants • Doctors

All are based on the work we did in creating the Billionaires Little Black Book, and tested—to be an in depth guide to hiring and managing professionals on a Trusted Advisory team.


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Refined FOCUS Questions for the Professions Use the following questions of professionals in various professions.

Questions for lawyers Attorney fees can be questioned, even with a rate card, and the client has a right to receive an expense and time breakdown for separate charges. Communication must be adequate for the client to understand. The client has a right not to have the case, or legal work neglected, and the client has a right for the attorney to be more than adequately prepared at all times. The client has a right to regularly detailed accounting of property, assets, anything entrusted to the attorney’s care. The attorney should be familiar with local courts, judges, and other players in the legal system. Forward Thinking Who is your typical client? Do you have an area of specialization? Do you give advice only, or do you litigate? Describe the worst client you have ever had. How long will you expect me to be your client? Why? Can I get out of situations quickly and without high cost? What are the danger signs the relationship is not working?


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“You shape your houses and then they shape you.” Winston Churchill

What happens to me if you change firms? How do I complain or seek restitution if there is a problem? On Target

How many active clients will you work with at a time? Reversing the roles, a minute; as a client, why do you want to hire me? What kinds of people do you not want as clients? Will you take possession of, or have access to, my assets? Do you have the discretion to modify my investments or financial structures without my approval? How much in fees will you and your firm earn on our work? What is your rationale for picking a specific strategy? After all fees are paid, will you discuss with me how much must a strategy gain in value before I break even? Clear Purpose What service will I get?


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How often will I hear from you, and what will prompt your calls? What is your legal philosophy? Have you ever had complaints filed against you by clients? How were or how would-be complaints against you resolved? How do we make sure we don't have a similar problem? How do I know if your recommendation suits my needs and risk tolerances? Will this sale help you win any prizes or contests? Useful Processes

What certifications, if any, do you have? Can I have a copy of your license? What is your fee? What criteria do you use before deciding what to buy? Under what conditions do you change strategy? Can I review sample plans and documents for educational purposes? Can I get the names of a few clients to provide me with references?


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Will anyone else be working with me? Do you personally research the strategies you recommend? How will we resolve complaints, if I am dissatisfied? How do I terminate this relationship, if we do not reconcile my concerns? What standard do we set for performance; and how do we monitor progress? Sincere Attitude What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you decide to become a lawyer? What is your definition of "justice?"


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Questions for Psychologists Psychologists should be able to deliver short-term therapy. Any therapy they recommend should set clear objectives within a time frame. They ought to be able to establish a rapport. They can be expected to be caring, confident and ethical. Good resources for psychologists and psychotherapists are counselors, doctors, hospitals, management consultants, an experienced wealth adviser, and friends. Forward Thinking Who is your typical client (patient)? Do you have an area of specialization? Do you mostly listen, or are you more interactive? Describe the worst client you have ever had. How long will our work together take? How do you know? Can I cancel your services without penalty? What are the danger signs that our working relationship is not working properly? What happens to me if you change practices? How do I complain if I have a problem?


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“The important

thing is not to

stop questioning.”

Albert Einstein

On Target

How many active clients do you work with at any given time? Reversing the roles, a minute; as a client, why do you want to hire me? What kinds of people do you not want as clients? Will you have any access to my assets? What is your rationale for using a mode of treatment? Clear Purpose What service can I expect? Will I hear from you outside treatment, and what will prompt your calls? What is your treatment philosophy? Have you ever had complaints filed against you by clients? How were or how would-be complaints against you resolved? How do I know if your recommendations are right for me? Useful Processes


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What certifications, if any, do you have? May I see a copy of your license? What is your fee? What criteria do you use in making suggestions to me? May I get the names of a few references? Will anyone else be working with me? Do you upgrade your knowledge of the changes in your profession? How will we resolve complaints, if I am dissatisfied? How do I terminate this relationship, if we do not reconcile my concerns? What standards do we set for progress; and how do we monitor progress? Sincere Attitude What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you become a psychologist? What is your definition of "normal?"


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Questions for physicians A physician should communicate sensitively, but clearly. A physician can be expected to be on a schedule. The ability to make a diagnosis and encourage a second opinion is important. A physician should not order too many tests. A physician has a responsibility to protect the patient's privacy. The professional medical staff supporting the physician should be pleasant and helpful. Forward Thinking Who is your typical patient? Do you have an area of specialization? Do you give advice only, or do you research? Describe the worst patient you have ever had. How long will you expect me to remain under your care? Why? Can I elect not to have treatments or procedures? What are the danger signs our relationship is not working? What happens to me if you change practices? How do I complain or seek restitution if there is a problem? On Target How many active patients will you work with at a time?


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Reversing the roles, a minute; as a patient, why do you want to hire me? What kinds of people do you not want as patients? Will you ever have access to my assets? Do you have the discretion to modify my treatment without my approval? What is your fee? What is your rationale for picking a specific medication of procedure? Will you discuss with me early how much additional investment might be required for additional treatment? Clear Purpose What services will I get? How often will I hear from you, and what will prompt your calls? What is your care and treatment philosophy? Have you ever had complaints filed against you by patients? How were or how would-be complaints against you resolved? How do I know if your advice is best for me?


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“One of the greatest discoveries a man makes, one of his great surprises, is to find he can do what he was afraid he couldn't do.” Henry Ford

Will my outside procedures, treatments or prescription medications earn you additional income? Useful Processes

What certifications, if any, do you have? May I see your medical license? What is your fee? What criteria do you use before deciding to treat? Under what conditions might I be referred to another doctor or specialist? Can I review sample treatment plans? Can I get the names of a few patients as references? Will anyone else be working with me? Do you personally research the products and treatments you recommend? How will we resolve complaints, if I am dissatisfied? How do I terminate this relationship, if we do not reconcile my concerns?


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What standard do we set for performance; and how do we monitor progress? Sincere Attitude

What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you become a medical doctor? What is your definition of "healthy?"


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Questions for Accountants Accountants are state licensed to provide their services to the public. Their experience, skill and specialization distinguish and define what they are capable of doing for their customers. They include tax preparers, tax advisors, pubic accountants and CPAs. They may or may not perform bookkeeping tasks. Some of the competencies to watch for are: Technical competence in areas important to you, organizational curiosity and depth of interest in your situation, a view to year-round comprehensive analysis, aggressive dealing-audit capability, audit representation, a strong support network (think of this as a sub team), and the ability to direct you as the accountant’s silent partner in record-keeping, sharing information, and education. Forward Thinking Who is your typical client? Do you have an area of specialization? Do you give advice only, or do you perform services? Describe the worst client you have ever had. How long will you expect me to work with you? Why? Can I get out of your advice quickly and without high cost? What are the danger signs the relationship is not working?


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What happens to me if you change firms? How do I complain or seek restitution if there is a problem? On Target

How many active clients will you work with at a time? Reversing the roles, a minute; as a client, why do you want to hire me? What kinds of people do you not want as clients? Will you take have access to my assets? Do you have the discretion to modify my investments or other business without my approval? What are your fees? What is your rationale for choosing a specific approach and structure? After all fees are paid, what is your responsibility to me? Clear Purpose What service will I get? How often will I hear from you, and what will prompt your calls? What is your accounting philosophy?


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Have you ever had complaints filed against you by clients? How were or how would-be complaints against you resolved? How do I know if your recommendations suit my needs and risk tolerances? Will my business help you win any prizes or sales contests? Useful Processes What certifications, if any, do you have? May I see a copy of your state license? What are your fees? What criteria do you use before deciding a direction for my financial affairs? Under what conditions do you refer to an outside resource? Can I review sample plans and statements? Can I get the names of a few clients as references? Will anyone else be working with me? Do you personally research the solutions and/or products you recommend? How will we resolve complaints, if I am dissatisfied?


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How do I terminate this relationship, if we do not reconcile my concerns? What standard do we set for performance; and how do we monitor progress?

Sincere Attitude What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you become an accountant? What is your definition of "standard practice?"


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Questions for physical therapists A physical therapist should work with people of the same age and condition you're seeking. The physical therapist should be familiar with your ailments. There ought to be a trained staff with complementary skills and those skills should be regularly updated. A physical therapist needs to be a good listener. She needs to be good communicator. And have good rapport. Perhaps above all, a physical therapist needs to exhibit patience. Forward Thinking Who is your typical client (patient)? Do you have an area of specialization? Do you give advice only, or do you perform the treatments yourself? Describe the worst client you have ever had. How long do you anticipate me working with you? Why? Can I get out of treatment, for any reason, if I wish? What are the danger signs the relationship is not working? What happens to me if you change practices? How do I complain or seek restitution if there is a problem?


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On Target

How many active patients will you have at a time? Reversing the roles, a minute; as a client, why do you want to hire me? What kinds of people do you not want as clients? What is your rationale for picking a specific product? Will you discuss with me how much additional, or outside, care I might need if my situation does not improve? Clear Purpose What service(s) will I get? How often will I hear from you, and what will prompt your calls? What is your treatment philosophy? Have you ever had complaints filed against you or the practice? How were or how would-be complaints against you resolved? How do I know if your recommendation suits my needs and tolerances? Will my business help you win any prizes or sales contests?


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Useful Processes What certifications, if any, do you have? May I see your state license? How (and how much) do you get paid? What criteria do you use before deciding how to treat? What are your fees? Under what conditions do you deny treatment or refer someone out? Can I review sample treatment plans? Can I get the names of a few clients to provide me with references? Will anyone else be working with me? Do you personally research the treatments, procedures, and products you recommend? How will we resolve complaints, if I am dissatisfied? How do I terminate this relationship, if we do not reconcile my concerns? What standard do we set for performance; and how do we monitor progress?


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Sincere Attitude What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you become a physical therapist? What is your definition of "mobility?"


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Questions for Realtors, Developers and Mortgage Brokers and Insurance Agents It is rare for some project-oriented professionals, like developers, to have the same sense and understanding of fiduciary responsibility that, say, realtors do. A good developer or realtor will guide you. They will keep you up-to-date on market conditions. They will arrange multiple financing options that fit your needs and they will not mislead you, or be deceptive. As I mentioned in the story, fiduciary incorporates the following: care, confidentiality, loyalty, obedience, accounting, and disclosure. You have a right to all of these in property and other project transactions. Forward Thinking Who is your typical client/customer?

*Typically a broker represents the seller; the buyer is the customer. In some states there are buyer brokers, which move the customer to client status.

Do you have an area of specialization? Do you give advice only, or do you execute the transactions? Describe the worst client/customer you have ever had. How long will you expect me to work with you? Why? Can I get out of investments quickly and without high cost? What are the danger signs the relationship is not working?


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“Long-term investment success depends not on studying betas and maintaining a diversified portfolio, but on recognizing that as an investor, one is the owner of a business.” Warren Buffett

What happens to me if you change firms? How do I complain or seek restitution if there is a problem? On Target How many active clients/customers will you work with at a time? Reversing the roles, a minute; as a client/customer, why do you want to hire me? What kinds of people do you not want as clients/customers? Will you take possession of, or have access to, my assets? Do you have the discretion to modify my documents without my approval? How much commission will you and your firm earn on my transactions? What is your rationale for picking a specific property and/or strategy? After all fees are paid, will you discuss with me how much must an investment gain in value before I break even?


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Clear Purpose

What service will I get? How often will I hear from you, and what will prompt your calls? What is your real estate investment philosophy? Have you ever had complaints filed against you by clients/customers? How were or how would-be complaints against you resolved? How do we make sure we don't have a similar problem? How do I know if your recommendation suits my needs and risk tolerances? Will this transaction help you win any prizes or sales contests? Useful Processes What certifications, if any, do you have? May I see a copy of your license? What are your fees? What criteria do you use before deciding what to buy? Under what conditions would you sell?


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Can I review sample plans and offers? Can I get the names of a few clients/customers to provide me with references? Will anyone else be working with me? Do you personally research the investment situations you recommend? How will we resolve complaints, if I am dissatisfied? How do I terminate this relationship, if we do not reconcile my concerns? What standard do we set for performance; and how do we monitor progress? Sincere Attitude

What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you become a broker (or developer)? What is your definition of "quality?"


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“You can't build a reputation on what you are going to do.” Henry Ford

Questions for specialized professional help Specialized professionals educated in asset structuring, should clearly state the liabilities and responsibilities of both parties. They should advise you honestly about the risk from their advice and suggestions, spending as much time on this as on the structure itself. They should commit and follow-up with keeping you up-to-date on legal changes that might affect you. Everything you do should be clearly explained and the appropriateness and timing should be fully discussed. Forward Thinking

Who is your typical client? Do you have an area of specialization? Do you give advice only, or do you execute the transactions? Describe the worst client you have ever had. How long will you expect me to hold a given investment? Why? Can I get out of investments, or structures, quickly and without high cost?


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What are the danger signs the relationship is not working? What happens to me if you change firms? How do I complain or seek restitution if there is a problem? On Target How many active clients will you work with at a time? Reversing the roles, a minute; as a client, why do you want to hire me? What kinds of people do you not want as clients? Will you take possession of, or have access to, my assets? Do you have the discretion to modify my investments, or structures, without my approval? How much commission will you and your firm earn on my transactions? What is your rationale for picking a specific product, or strategy? After all fees are paid, will you discuss with me how the investment or structure will benefit me going forward? Clear Purpose What service will I get? How often will I hear from you, and what will prompt your calls?


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What is your investment philosophy? Have you ever had complaints filed against you by customers? How were or how would-be complaints against you resolved? How do I know if your recommendation suits my needs and risk tolerances? Will this sale help you win any prizes or sales contests? Useful Processes

What certifications, if any, do you have? Do you have business license I may have a copy of? What are your fees? What criteria do you use before deciding what to buy, or how I should be structured? Under what conditions do you sell investments, or change strategy? Can I review sample plans and statements? Can I get the names of a few clients to provide me with references? Will anyone else be working with me?


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Do you personally research the products and procedures you recommend? How will we resolve complaints, if I am dissatisfied? How do I terminate this relationship, if we do not reconcile my concerns? What standard shall we set for performance; and how do we monitor progress? Sincere Attitude What is your educational and professional background? In what continuing education classes are you planning to enroll? How did you become an expert in structuring? What is your definition of "proper?" “Appropriate?” “Prudent?”


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ILLUSTRATIONS OF THE NEED FOR TEAMS IN YOUR BUSINESS


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ILLUSTRATION #1

Scary Story By Janet Arrowood A registered rep in Utah did everything right by his elderly clients. He even recommended long-term care insurance as an asset-preservation tool, but they had turned him down. Later, when their son sued him after both parents tragically suffered from dementia and began ringing up incredible medical bills, the advisor assumed he was covered by his errors-and-omissions insurance. He was so confident, in fact, that he didn't keep a record of his advice, which would likely have helped him immensely in the suit. Unfortunately, his confidence was misplaced. While his actions routinely covered him from a suit by his clients, it did not protect him from their son acting on their behalf. His ignorance of the fine print cost him dearly: He had to pay $600,000, plus any legal fees incurred, to the son. Although his penalty was exceptional, his mistake was all too common. Errors-and-omissions insurance, or E&O as it is generally known, is a fundamental part of an advisor's life that is too often taken for granted. When


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interviewed, wire house representatives at Morgan Stanley, A.G. Edwards and Merrill Lynch, as well as the chief executive of a Denver-based financial-services firm, were ignorant of their coverage. They didn't know any details of their deductibles, limits and exclusions, and they all assumed they were covered for everything, though that was not the case. In a world where financial lawsuits regularly make headlines, advisors that ignore their E&O coverage do so at great risk to their careers and their pocket books. Legal fees alone can empty a wallet. The average cost for defendants, says Jerry Reiter, founder of Financial Advisor Legal Association and a former financial advisor, is in excess of $42,000, and they are stuck paying the deductible, even if they win. Even if they never get sued, it behooves advisors to know what their coverage is and how it compares to other policies, because they frequently must pay for some or all of it — an amount that can run thousands of dollars annually. The information may come in handy when comparison shopping for a new job or, if staying put, lobbying for changes in the policy so that it fits particular needs. What's in It for Advisors? A boilerplate policy, says Z. Jane Riley, compliance officer of The Leaders Group, a broker/dealer based in Littleton, Colo., will pay damages up to a limit:


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* Typically the deductible is anywhere

from $2,500 to $10,000 per incident, with a coverage limit of $1 million to $5 million per claim.

* The firm usually has a separate E&O policy with higher deductibles and higher limits.

* Once the firm's aggregate limit is reached, its advisors may not have any E&O coverage.

* “Preferred” insurance companies may have a lower deductible than other insurance companies.

Whatever the deductibles, there are some things that most policies will not cover. For example, in the case of the Utah rep, his policy may have helped protect him against the insured, but did not protect him from someone acting on the insured’s' behalf. This is a fairly common exclusion, and advisors should be on guard against it since, according to Riley, the plaintiffs in a majority of suits are related to the clients (i.e., not the actual client). There is also the possibility that advisors may be covered for some things and not others, like when they are a fiduciary but not when they are a trustee — or the opposite. Also, a policy may or may not provide “past acts” coverage for “claims made” (i.e., things you did in the past, at another b/d and/or under a previous E&O policy).


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The Paper Trail As important as it is to know what's in an E&O policy, it is even more important for advisors to keep good records of everything they do, so they can provide any supporting documentation in case they are sued or taken to arbitration. In the Utah case, once again, the advisor didn't have a paper trail or e-trail of his advice to his clients. Had he created a paper trail, the son would have likely have had no case against the representative and the type of coverage the representative had would not have mattered much. In fact, there was a similar case where, after much digging, the rep found a copy of a letter he had sent to clients in an analogous situation, and the client's attorneys squashed the suit before it got under way. Just how important is a paper trail? Client's lawsuits, say most compliance and E&O specialists, are almost always taken on a contingency-fee basis. If an advisor is sued and can produce paperwork to show that they acted properly, the client’s lawyers will almost always require their client to pay a large retainer, because their likelihood of winning is much lower. At that point, most clients drop thoughts of winning big bucks from a lawsuit or settlement and the case goes away. Bruce Kantor, president of Kantor & Associates, in Charlotte, N.C., agrees wholeheartedly with


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the need to document every client and prospect conversation, especially conversations where the person declines to take recommended actions. Taking Change into Account Even advisors well versed in their E&O coverage shouldn't file their policies away in a drawer. They need to review their policy at least once a year, says Rick Eldridge, CEO of Intuitive Insurance in Castle Rock, Colo., especially if they change plans, retire or change b/ds. Advisors who retire or leave their firm normally will sign an “exit agreement,” “severance contract” or a similar document, and they need to make sure this document includes a “hold harmless” agreement in defense against claims that result from their employment. This agreement should provide ongoing legal defense and coverage, as if the E&O were still in force, for the advisor's actions while he was an employee. After all, as Yogi Berra might say, it should be over when it's over.

REGISTERED REP.COM Apr 1, 2006 12:00 PM


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ILLUSTRATION #2

MICHELLE SINGLETARY: THE COLOR OF MONEY

Contests buoyed improper trades

By Michelle Singletary

WASHINGTON - Imagine your brokerage firm sends you a letter saying your account will now be handled via a centralized call center. So one day you call to ask a simple question about one of your mutual fund holdings. Next thing you know, you're persuaded to switch your money into another fund, costing you extra fees and charges.

What does the salesperson get for the unsuitable switch? Tickets to a rock concert.

What just happened?

To borrow from the MTV show of the same name, you got "punk'd."

However, unlike in the show hosted by Ashton Kutcher, in which getting "punk'd" means you are the victim of a prank, this is for real. This allegedly happened to some Merrill Lynch customers, according to NASD, the private-sector regulator for the securities industry.


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NASD announced recently that it fined Merrill Lynch $5 million for failing to supervise advisers, holding impermissible sales contests and other violations in connection with the operation of a financial call center with locations in Hopewell, N.J., and Jacksonville, Fla.

Learn from this story. It's a lesson on how not to get punk'd.

In 2001, NASD said Merrill Lynch began handling thousands of customer accounts throughout the country in what the firm called its Financial Advisory Center, or FAC.

Generally, smaller accounts with assets of $100,000 or less, or those with minimal transactional activity, were moved to this centralized financial center, in part so that Merrill Lynch's full-service financial advisers in branch offices could devote more attention to larger accounts, according to NASD. The firm failed to disclose that the brokers staffing the centers often had five years or less brokerage experience and that they were limited to recommending mutual funds.

"These brokers weren't as experienced as the brokers in the regular branch offices," said NASD's head of enforcement James Shorris. "And they didn't get enough supervision."

From 2001 to 2004, NASD said the brokers/advisers were found to have "engaged in a pattern of mutual-fund switch


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recommendations that were accompanied by misrepresentations and omissions of facts to customers."

In settling this matter, Merrill Lynch neither admitted nor denied the charges.

The company, in a statement, said it was going through "growing pains" as it expanded the financial center.

But it sure looks like a profitable pain.

Between March 2001 and August 2002, more than 1 million customers were transferred to the financial center. At its peak size in 2002, this part of the firm had approximately 1.3 million accounts holding approximately $20 billion in assets. That year, the center had gross revenues of approximately $210 million. Shorris said a significant amount of that revenue was obtained through mutual fund-switching activity.

Moreover, NASD found that several advisers recommended mutual-fund moves that were not suitable for their customers. Advisers also recommended customers switch without first telling them there might be comparable funds within their existing mutual fund families, which would have avoided sales charges.

Then there were the contests.

We all know companies often offer incentives to their sales forces to boost revenues. But in the


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investment world, certain contests are prohibited.

NASD said its investigation found Merrill Lynch conducted three contests that violated the non-cash compensation rule because they favored the sale of the firm's own proprietary mutual funds.

The regulator found that advisers who sold the most proprietary mutual fund products were awarded concert tickets to see Foreigner, dinners and other perks.

Merrill Lynch says it's made significant changes to its operation.

"We have acknowledged that we had growing pains in Merrill Lynch's Financial Advisory Center four and five years ago when it expanded," the company said in a statement. "We are confident we've worked them out."

I certainly hope so. But there are many perils out there for investors. To protect yourself, I suggest you take some advice from NASD.

If you are shifted to a call center, be wary of an adviser who recommends that you move money out of existing investments and into new ones, particularly into their firm's own mutual funds or investment products.

Specifically ask the adviser if there is a similar fund within your existing mutual fund family. Find out the cost to switch. Get him or her to


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prepare a side-by-side comparison of fees and expenses between your existing fund and the recommended one.

To double check, use the NASD's "Mutual Fund Expense Analyzer." You can find this analyzer at www.nasd.com.

This is also not the time to be polite. I know your mama or daddy may have said never ask people how much they are getting paid, but in this case ignore that advice. Ask how the adviser is being compensated. Ask if selling you this product would help him or her win a contest. Be sure to take notes on what you are told in case you need to complain to NASD later.

I was punk'd once.

A broker advised me to switch from one fund to another. He earned more than $1,800 on that transaction. Naïve me, I ended up in a fund similar to the one I had owned. That was a costly mistake I won't make again.

Remember the old saying. Fool me once, shame on you. Fool me twice, shame on me.


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ILLUSTRATION #3

DALLAS -- Peter Beasley is a busy man who currently has no health insurance. He's also a customer of TelaDoc Medical Services, a setup that allows him to call an unknown doctor and get medicine prescribed sight unseen.

Within an hour or so of his call to an 800 number, he gets a call from a doctor who discusses his symptoms and will often write a prescription.

TelaDoc provides its members -- which the company estimates at 30,000 -- with access to a doctor 24 hours a day, seven days a week.

While members like Beasley praise the service as a convenient way to address nagging medical needs at odd hours, others in the health care industry say treating patients without seeing them in person is worrisome, perhaps dangerous. California's medical board is investigating TelaDoc's activities in that state.

TelaDoc chief executive Michael Gorton said the Dallas-based company is merely providing a needed service and is not meant to replace the family physician. The company began offering its services nationwide this year after an earlier test run.


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"For the vast majority of Americans, being able to talk to a doctor in an hour is next to impossible," Gorton said. "Our motto is we're there when your normal doctor is not."

TelaDoc subscribers are guaranteed to hear back from a doctor within three hours of their phone call. After paying a registration fee of $18 and completing a medical history, an individual subscriber pays $4.25 a month and a $35 fee per consultation.

Gorton said ailments range from urinary tract infections to strep throat to allergies.

But doctors' groups and medical ethics experts question the notion of putting convenience first.

"Practicing medicine without seeing the patient is still a dangerous thing," said Arthur Caplan, chairman of the department of medical ethics at the University of Pennsylvania. "From the doctor's point of view, it's not standard care."

Dr. Larry S. Fields, president of the American Academy of Family Physicians, said he doesn't see the benefit of TelaDoc.

"As much as I'd like to put a positive spin on it, most patients can get to their family physicians just as quickly by telephone," he said. Establishing a doctor-patient relationship should involve an office visit with a general exam and an ongoing plan for the patient's long-term health,” Fields said.


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While the American Medical Association doesn't have a specific policy on such services, there are some concerns for the patient, said AMA president Dr. Edward Hill. "Nothing we think, can replace a face-to-face with a doctor."

Gorton said that doctors with his network won't hesitate to send patients to an emergency room if their symptoms warrant it. And he notes that many doctors have addressed the needs of unknown patients by handling after-hours phone calls for their colleagues.

He said that there are around 160-170 different medical licenses represented in 50 states with his service, which doesn't treat children under the age of 12.

Five states -- Virginia, Florida, Tennessee, Mississippi and South Carolina -- require an examination, Gorton said. In those states, he said, patients get bloodwork and have their temperature and blood pressure checked to enable them to use TelaDoc.

The Medical Board of California has opened an investigation into the company. Spokeswoman Candice Cohen said that meeting the requirement of a good faith examination in California includes an in-person visit.

Gorton says he welcomes the scrutiny.


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"We expect boards of medical examiners to look into what we're doing and we expect to come out of it squeaky clean," he said.

TelaDoc does not write prescriptions for controlled substances or narcotics. And uninsured patients with chronic medical conditions are limited in their use of the service, according to Gorton.

Beasley, 47, who is starting his own software company in Dallas, has had health insurance on and off for the past two years. He's used TelaDoc for treatment of poison ivy and to get a prescription eye ointment.

"It's certainly not the answer for anything life-threatening," he said. "For people that don't have health care or are in between jobs, I think it's a great add-on."


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ILLUSTRATION #4

By Marc Siegel When you go to a doctor's office, you expect to be seen in a timely manner by a qualified professional. Your concern is your health, certainly not a distant issue such as the malpractice-insurance debate. It's an industry issue that doesn't affect you, right? But consider:

• Care is being affected. Doctors are rushing to see more patients to cover the costs of rising premiums. Much as a teacher is more effective in smaller classrooms, physicians are best with manageable caseloads.

• Legal distractions are becoming more common. According to the American Medical Association (AMA), one in six physicians face a medical-liability claim each year. In high-risk specialties, the number of such claims rises. Now, many time-pressed doctors have even less time because of lawsuits. Yet 70% of the cases filed are found to be without merit.

Patients should consider that a demoralized and distracted doctor is not an effective caretaker. And doctors must begin to "heal ourselves" by acknowledging that much of our anger toward lawyers is misplaced.

The wrong message


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At a recent AMA meeting in Chicago, some doctors said they were going to refuse to care for malpractice attorneys. But physicians' anger is not an effective tool for change. Besides, insurance companies, not lawyers, determine the prohibitive malpractice-insurance rates while ensuring their own profitability.

These skyrocketing rates, together with frivolous lawsuits, are sending the U.S. health care system into a predictable death spiral. Both must be addressed through reasonable reforms, not knee-jerk actions. If not, the patient will be the one to suffer.

Doctors would be wiser to group together and devise their own insurance than to target lawyers. A plaintiff's attorney in New York has a proposal to create liability insurance for physicians. He believes premiums are so over inflated that he can market malpractice insurance at one-third the current price. If such a notion were indeed possible, it would indicate that insurance companies are more than covering their costs.

Cost to patients

What should matter most to the patient is that the frustration and animosity that envelope malpractice-beleaguered physicians, many of whom may have done no wrong, may affect their concentration or even the quality of care. Doctors have become defensive, forced to write copious notes on each patient and order


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unnecessary tests as ways to protect against lawsuits.

No panacea exists for the malpractice dilemma, but a system of peer review in the courts and in hospitals would be a good start. Panels of experts in both venues could serve as a safeguard against frivolous lawsuits while ensuring that patients who have suffered true malpractice have their day in court.

Current Michigan law shows how a panel can be a gatekeeper for malpractice actions. The law requires a review of all potential lawsuits before a mediation panel, which has two weeks to determine whether care has deviated from normal, accepted standards of practice. A patient may reject the panel's opinion, but then must pay the doctor's costs if the final verdict goes for the defendant. This disincentive helps to weed out frivolous suits.

Finally, the government should restrict insurance companies. Premiums should be regulated, much as doctors' fees already are through managed care and Medicare. In order to heal the system, health care reform must begin by stopping the hemorrhaging caused by rising malpractice-insurance rates.

The health care system must become less profit-driven, less punitive and more careful in identifying avoidable errors that really do hurt patients.


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The next time your doctor seems quiet in the examination room, or offers short answers to your questions, think about malpractice rates, lawyers and insurers. And think about change.

Marc Siegel, an internist, is a clinical associate professor at New York University Medical School.


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ILLUSTRATION #5

Are There Too Many Lawyers?

”When there are too many policemen, there can be no liberty. When there are too many soldiers, there can be no peace. When there are too many lawyers, there can be no justice.”

Lin Yutang (1895-1976), Chinese-American writer, translator, and editor.

Just the other day I received a telephone call from a gentleman who had been perusing our Power of Attorneys.com web-site. He seemed very frustrated in his futile attempts to compile a list of law firms who were involved in class action litigation. In an e-mail he forwarded a little later, he stated, “This information is not readily available, as you can imagine.”

I can imagine, all right. Trying to get a handle on the number of lawyers in the United States is a next to impossible task. But there's one thing for certain about the number of lawyers in America and it is this -- there is no shortage of them. In fact, one could reasonably argue that there are too many lawyers in America.

Let’s take a closer look.


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In 1995, the American Bar Foundation stated that the number of lawyers in the United States was 896,000. More recently, estimates from varying sources places the number at around 1,000,000 lawyers in America. ONE MILLION LAWYERS! One million people are a whole lot of folks, but one million lawyers looking for someone to sue – YIKES!

In a survey conducted back in 1972 by the American Bar Association, seventy percent of Americans not only didn’t have a lawyer, they didn’t know how to find one. That’s right; thirty years ago the vast majority of people didn’t have a clue on how to find a lawyer. Now it’s almost impossible not to see lawyers everywhere you turn.

Lawyers chant their relentless “sue onto others before they sue unto you” mantra 24/7. From their trash talking commercials on TV, where lunatic lawyers hoot and holler about how they’ll fight for your rights, to the countless tawdry billboard ads, trashy newspaper announcements and tasteless yellow page advertisements – lawyers are everywhere you look. Boy, I’d say that things have definitely changed since 1972 – and not for the better, I hasten to add.

OK, I’ll grant you that there is, and always will be a market for lawyers to ply their trade. But come on, do we really need lawyers asking us, “Have you been injured?” a thousand times a day?


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With a million lawyers, give or take a few thousand, filing millions upon millions of lawsuits monthly, America is leaving the rest of the world in its litigation dust. Lawyers have finally positioned us right where they want us – busily scurrying all around looking for all sorts of inventive new ways to sue somebody over something or another. Suing has become the American way of life, or at least so it seems.

Where innovation, creativity and ingenuity were once the magnificent cornerstones of America’s entrepreneurial drive and spirit, these precepts are now merely platitudes used by hundreds of thousands of trial lawyers that manipulate others on a daily basis.

Interesting, isn’t it, that lawyers amass their fortune through the redistribution of existing wealth of others, rather than by creating wealth through their own entrepreneurial efforts? In other words, they rob from the rich, the poor and everyone else in between in order to benefit themselves.

Nowhere but in America are the individuals and companies who create business, create jobs and create opportunity so relentlessly pursued by lawyers.

So do we or don’t we, as a nation, have too many lawyers. I’ll let the numbers speak for themselves:

The U.S. has seventy percent of the world’s lawyers, but only five percent of the world’s


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population.

U.S. industry spends hundreds of billion dollars annually on litigation costs and efforts to avoid liability.

We have thirty times more lawsuits than Japan, one of America’s primary trade competitors.

Product innovation in America has been drastically curtailed due to overwhelming liability concerns.

The health care industry, one of the trial lawyers favorite targets, have costs that are spiraling out of sight, leaving many Americans underinsured or uninsured, and…

The costs of virtually every good and service has an increased cost, reflecting the cost of rampant litigation in this country.

Yet in spite of the immense wealth being efficiently siphoned from the wallets of each and every American into the bloated bankrolls of avaricious lawyers nationwide, the legal industry is awash in business.

In todays sue or be sued society, people are flocking to lawyers in droves. Americans are turning to lawyers to right every wrong or make everything right again, suing virtually anyone who can fog a mirror.

So even though lawyers suffer approval ratings


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well below even the sleaziest of used car salesmen, and are the butt of a never ending barrage of lawyer jokes, lawyers are still swamped with clients.

In America, where anyone, can sue anybody over anything, anytime they feel like it, business for lawyers has never been better. Never!

With all of the idiotic, nonsensical lawsuits that continually clog our court system and the stratospheric awards lame brain judges and juries are handing out, it seems like everyone is trying to cash in on the next lawsuit lottery.

With millions and billions of dollars for the taking, everyone wants a piece of the action, and nobody it seems wants to be left out in the cold.

Lawsuits, conflicts, fighting, fusing and fuming now rule the day while the lawyers, not surprisingly, rule the roost. So when it is all said and done (and with lawyers, more is always said than done), maybe we don’t have enough lawyers after all? Extra: Tax Guides There are three categories of tax guides. One type gives step-by-step instructions on preparing tax forms and offers tips and suggestions along the way. A second advises financial planning strategy and recommends ways to allocate or invest money in order to minimize taxes. A third counsels the adversarial approach. It is this tack


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that is taken by CPA Kaplan and specialist Weiss. They portray the IRS as arrogant, uncaring, vindictive, and rife with bureaucratic incompetence. By revealing IRS operating procedures that determine how and when a return is audited, the authors provide tips on minimizing the likelihood of an audit and they spell out "endless" loopholes in our tax laws that they say should be taken advantage of. Recommended for libraries whose patrons demand more than J. K. Lasser. David Rouse With tax laws constantly changing and existing regulations hidden in volumes of tax code, very little related to taxes is easy to figure out. Businesses and individuals in every income bracket need expert advice that cuts through the IRS bureaucracy and shows them how to work within the system. In “What the IRS Doesn’t Want You to Know: A CPA Reveals the Tricks of the Trade,” tax expert Martin S. Kaplan reveals critical strategies that the best CPAs use for their clients to file shrewd, legal, money-saving returns.

Filled with in-depth insights and practical advice, this book will help you answer such questions as:

• How can you approach the "new" IRS to maximize your tax return success?

• What are the latest IRS weapons? • What are the biggest taxpayer

misconceptions?


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• What are the most commonly overlooked credits and deductions?

• How will new tax legislation affect you? • How can outdated IRS technology benefit

you? • What forms should you never fill out?

From deciphering the Jobs and Growth Tax Relief Reconciliation Act of 2003, to understanding the personality of the IRS, “What the IRS Doesn’t Want You to Know” will help you shape your tax strategies and stay on top of your current financial situation.

Filled with in-depth insights and practical advice, this book will help you answer such questions as:

• How can you approach the "new" IRS to maximize your tax return success?

• What are the latest IRS weapons? • What are the biggest taxpayer

misconceptions? • What are the most commonly overlooked

credits and deductions? • How will new tax legislation affect you? • How can outdated IRS technology benefit

you? • What forms should you never fill out?


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Reference Tool Final Notes: On Financial Advice Many registered investment advisers are licensed as stockbrokers to execute purchases and sales. The vast majority of stockbrokers however, are salespersons, authorized to provide financial advice as incidental to their primary brokerage service. The term financial services became more prevalent in the United States partly as a result of the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of companies in the US financial services industry to merge. The increase in affluence among baby boomers is making the title of investment advisor even more blurry. There is the appearance of time-saving competence in the televised image of a well-rounded, well-connected, can-do professional who offers easy retirement planning. And this is happening in the midst of new investment product introductions. Investment advisers include hedge fund managers, pension fund managers, mutual fund managers, trust fund managers and also individuals, partnerships, or corporations which are registered under the act, including certain exempt categories. Investment advisers, by law, owe their customers fiduciary duty to provide full and complete disclosure of all fees, conflicts of interest, and if so authorized, to exercise discretion in selecting investments only with their client's best interests in mind. There are over 600,000 financial service professionals. Financial service companies represent the seventh largest national advertising category. Clearly these large firms have an enormous management challenge. And the competition for clients is fierce. Hypothetically, their ads keep the financial services the companies provide at the forefront of the client's mind. There is a deeper challenge, though, and that is to maintain a more personal relationship. How does either the customer or the advisor verify a personal relationship? Nowhere is the popular verbal ascension of a “stockbroker” to an “investment adviser” is there a general standard for service, fiduciary, or an analysis of the long-term needs of the customer. We call this last part "scenario planning" and consider it the third element in a wealth advisor's list of primary tasks. To our thinking it is not possible to create a trusted advisory without a specific service standard. The importance of that service


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standard becomes paramount to understand the interdependency with fiduciary and scenario, or long term planning and preparation. It becomes highly desirable once both the customer and the wealth adviser recognize the potential profitability.

Robert Bailey


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Appendix

Economy or Not Economy… A Power Tool for Squeezing Added Profits From YOUR Business This is a powerful self management tool and how to use it to rethink your business. This exercise is useful in thinking about how your business “fits in” to the economy. Being a pioneer is difficult and very expensive. But, if you "steal" ideas, improve on them, alter them in some way others have missed, or improve on a “normal” business by as little as 1%, you will be better off financially and far likelier to succeed with your personal goals. The business failure statistics bear this out. Richard Branson didn't invent the commercial airline with Virgin Atlantic. Neither did Southwest under Herb Kelleher. But each was innovative in ways the major airlines never dared. The purpose of this tool is to get you to think about such opportunities well in advance. Too many people think that they need to start today on the big idea. It is far more prudent to have a “gap” idea, research competitors, build your contact base, review profitable marketing opportunities, and keep polishing your marketing message. This tool is meant to slightly shift your perceptions about the ways business is done and consider how you might get more in tune with your customers. Don't misunderstand this. This isn’t a scientific procedure


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loaded with certainty. It’s an art to be practiced. But use this tool a few times and you will notice your understanding improves a bit each time. The financier George Soros has pointed out, that business is largely an art accompanied by success measurements. Think about the end and work backward. This is where your confidence builds by imagining yourself a huge success with your new ideas.

About this Business Power Tool: Economy or Not Economy

Read through this description until you feel familiar with the differences between the businesses. If you are unfamiliar with the actual companies because you live outside the U.S. please consider substituting a business example that makes sense to you. For example, in England you might think about Boots here instead of one of my examples, Walmart. Our focus is on helping you to understand the business concept.


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Exercise: Economy of Not Economy

In each cluster, select the (one) numbered “concept” that best describes the ECONOMIC framework of your business. 1) Competitive Model: What distinguishes me within our market? " Cost (Walmart competes on price. They buy

wholesale at a huge discount and factor diminishing margins into the speed of their sales that appear as savings which they pass along to their customers.)

" Differentiation (GM has multiple lines of

automobiles. You might start with the Chevrolet, and during your lifetime they will try to move you up to a Cadillac.)

" Innovation (Microsoft not only owns the majority

operating system for PCs. It has virtually cornered the market for PC software. Additionally, it provides upgrades that pledge security and added speed.)

" Customer intimacy (Your drugstore -- especially the

pharmacy -- is likely to have information about you well beyond what you provide most people. The smarter drug chains and small stores leverage this with things like educational programs and alerts.) 2) Business Model: How do I initiate my process of making money?


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Most people forget about the type of transaction they are proposing. Think about it for a minute. Below are seven business models. Each of these has a vastly different way of introducing itself to you, reminding you, and making you care. Identifying which of these is closest to the way you sell, will speed up the rates at which your customers find you.

(Select one)

" accounting (accountant) " insuring (insurance company) " financing (financier) " creating (Disney) " connecting (AOL) " transacting (Merrill) " executing: (Fed Ex)

3) Functionality: What is my role? Where are you in the food chain? Or, if you're innovative, where has your business been, typically, on the food chain? (select one)

" Wholesaler " Retailer " Manufacturer " Service provider

4) Economic Model: How do I actually make money?


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This is about the transaction. Question number two asked you how you initiate the process. After you've got the customer working with you, ask this—what is my transaction experience similar to for that person? What priority does your business play in the life of your customer? Is the person purchasing for herself? Is the individual purchasing for his company? This question moves your initial process into the transaction and gets you paid. (Select one)

" Aggregator (Amazon) " Banker (Bank One) " Broker (Charles Schwab) " Distributor (Staples) " Gatekeeper (Microsoft) " Lessor (landlord) " Partner (Disney-ABC) " Performer (Paul McCartney)

Follow up Questions 1. Do your choices align and complement each other? Do they conflict? How might you resolve this? 2. Are there better choices, combinations and possibilities for doing business? Review or redo the document. I like to test out a few variations. 3. How can you test the possible impact of your choices?


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TRY NOT TO VIEW WHAT’S NEXT… Until You Have Completed YOUR Economic Framework


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Sample: Comments to a fictional client, Ranan Corporation. (Innovation) Ranan doesn’t yet have the scale necessary to complete on cost or differentiation. Customer intimacy requires more time and greater involvement than we may have with each and every client. Innovation is a distinguishing and evolutionary characteristic which the founders each possess and the audience needs. (Creating) The creativity and stimulation of the course provide the opportunity to serve a loyal customer of a brand, without end (see innovation – above) (Manufacturer) As a creative business, Ranan is at the heart of design; providing a behavioral and structural experience. Using the available technologies, licensing, and product extensions the company creates, “manufactures,” and sells to numerous resellers and distribution channels. (Performer) As a brand, Ranan (and/or its hero) can be personalized and modeled. Sales and cross-sales consist of live, recorded and opportunistic products, licensed goods and services. Testimonials enhance and support the products’ value.


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Study Guide for “The Investment of a Lifetime”

and “The Billionaire’s Little Black Book”

1. In “The Investment of a Lifetime” what does FOCUS stand for? (page 168) 2. The true team strategy summarized, is:

The right ________, doing the right ________, in the right ________, at the right ________, for the right ________. (page 24)

3. John Dockerty’s MAP planning process stands for:

M………………… A………………… P………………… (page 112)

4. What are the four plans, in order, that support a lifetime of investment? 5. Name three of the seven benefits of a succession plan.


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(page 105 6. What are three of the five reasons that people don’t ask good questions? (Page 186) 7. What percentage of professionals does the author suggest represent elite advisors? (page 20)

8. Write five of the general focus questions mentioned in The Billionaire’s Little Black Book. (Page 185 through 188) How will you use them?

9. Write your favorite question from each of the professional categories in The Billionaire’s Little Black Book, with an illustration of how you will use the question. 10. Write your favorite quote from either “The Investment of Lifetime” or “The Billionaire’s Little Black Book”… explain how you will apply it.


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11. What is the importance of the focus questions? (Page 168) 12. Do you have a story of your own about helping your clients or customers, or your colleagues succeed? Share that story with us. If we use your story in our next book will send you $50 and a signed copy of this book. Get your answers reviewed with personalized comments (Please allow 2-6 weeks for response) Copy, complete and Fax this document to 866 450 8017


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For the complete Trusted Advisory Program Professional Edition for you and your financial advisor visit:

www.trustedadvisory.com The home-study program includes: Nine audio CDs 5 manuals and full support for engaging a sustainable financial team.

More active and current suggestions and insights on sustainable investing at:

www.trustedadvisory.com We regularly review real estate and equity investment for sustainable investments, including sustainable development and projects that meet stringent requirements as demonstrating sound preservation economics.

If you want to put sustainable practices and your investment of a lifetime strategy into hyper-drive. Contact us at 866 450 8017 Or write [email protected]


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Market: The Secrets to Buying Low and Selling High The Right Way to Hire Financial Help: The Complete Guide to Choosing and Managing Brokers, Financial Planners, Insurance Agents, Lawyers, Tax Preparers, Bankers and Real Estate Agents

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About this work

The Billionaires Little Black Book is the result of a series of surveys and conversations with professionals in the institutional and wealth investment business. Originally it was a program dedicated to helping financial advisors better serve their clients. With the abuses and turmoil in the financial markets in the first decade of the new millennium, my warnings had been validated beyond anything I had imagined. Where many do (and should) have faith in professional capabilities, it stands to reason that, as in any competitive sport, the better the client, the better the advisor. Where the emphasis had been on the advisor, the author believes clients and customers must now be accountable for their decisions, in a kind of informed consent. The system described in this book is intended to create the most cohesive and productive professional relationships possible. Robert Bailey has broad experience connecting ideas and people in business through networking. He is the founder of The Breakfast Club in New York City. For 2 years New York’s highest achievers were introduced to some of the greatest leaders of that time. Today he connects funding to “Long View” investments and the development of forward thinking, community enhancing real estate projects. Visit www.trustedadvisory.com or contact [email protected]

Billionaires Black Book by Robert Bailey

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